Enbridge (ENB 1.49%) has truly been a rewarding investment over the years. This Canadian titan, a leader in pipelines and utilities, has maintained a consistent streak of paying dividends for over seven decades, with increases every year for the past 30 years. With its income and earnings steadily on the rise, Enbridge has consistently delivered strong returns, boasting an impressive 12% annualized return over the last 20 years. That means if you had invested $25,000 two decades ago, you’d be sitting on over $241,157 today.
Looking ahead, Enbridge seems well-positioned to keep enhancing shareholder value. This potential makes it a formidable choice for those considering a long-term stake, depending on how much you’re willing to invest and retain over time.
### An Attractive Base Return
Enbridge runs one of the most extensive energy infrastructure networks across North America. This includes the continent’s longest and most intricate crude oil and liquids transportation system, handling 30% of North America’s oil production. In addition, its significant gas infrastructure moves about 20% of the natural gas consumed across the United States. Enbridge is also home to North America’s largest natural gas distribution network and boasts a sizable and expanding global renewable power business.
The cornerstone of its operations—pipelines and utilities—brings in highly stable cash flows. Approximately 98% of its income is derived from services that have predictable costs or are under contract. Such stability ensures a reliable and gradually increasing income stream for the company.
Enbridge allocates about 60% to 70% of its earnings to dividends, currently yielding an enticing 6.1%. For instance, investing $25,000 in Enbridge today could yield over $122,700 in cumulative dividend income over the next 30 years at this rate, assuming no reinvestment or dividend increase.
### Solid Growth Potential
Enbridge’s impressive dividend is just one part of the return story. The company’s track record for growing earnings and dividends is robust—and expected to persist. Enbridge is ambitiously expanding, with CA$29 billion ($20.3 billion) in secured projects slated for completion by 2029. These include developing its liquids pipeline operations, launching new natural gas projects, expanding gas distribution and storage services, and undertaking more renewable energy initiatives. Beyond this, there’s an additional CA$50 billion ($35 billion) of projects under development, poised for capture by the decade’s end. Given the anticipated rise in energy demand coupled with Enbridge’s focus on less carbon-intensive energy solutions such as natural gas and renewables, the company is poised for continued operational growth.
Funding these expansions is no issue for Enbridge. They estimate an annual capability to support CA$9 billion to CA$10 billion ($6.3 billion to $7 billion) in development, using free cash flow after dividends and leveraging a robust balance sheet. This investment should boost cash flow per share by 3% annually through 2026, with an expected 5% increase rate afterward. These projections suggest potential for dividend growth of up to 3% annually through next year, advancing to as much as 5% annually post-2026.
### An Attractive Total Return
Enbridge’s burgeoning earnings and dividends underscore its potential for substantial total returns. This prospect, paired with a dividend yield exceeding 6% and a projected 5% annual cash flow increase long-term, hints at possible total annual returns of about 11%.
The power of compounding over time is considerable. For instance, starting with a $1,000 investment today and contributing an additional $250 each month could grow into over $1 million in 35 years.
While Enbridge can’t promise these returns in the coming decades, its solid history of delivering formidable returns and potential for future growth is undeniable.
### A Potentially Very Enriching Investment Opportunity
Enbridge has a proven reputation as a wealth generator over the decades and stands in a great position to persist in amplifying shareholder value moving forward. With its solid growth trajectory, Enbridge can potentially set investors up for substantial wealth accumulation if they take a long-term hold on sufficient shares. All these aspects make it an incredibly appealing choice for long-term investors.
