This Magnificent 6.5%-Yielding Dividend Stock Adds Another $700 Million of Fuel to Keep its Growth Engine Humming Along

Enbridge (NYSE: ENB) recently unveiled another new expansion project. The Canadian pipeline and utility company will build, own, and operate crude oil and natural gas pipelines to support BP's (NYSE: BP) recently green-lit Kaskida development. Enbridge's $700 million projects should come online by 2029 when Kaskida starts producing, further extending the company's long-term growth outlook.

This will add more fuel to its dividend growth engine. The company has increased its payout, which at current share prices yields more than 6.5%, for 29 straight years.

A growth extender

Enbridge is building two new pipeline systems to support BP's operations in the Gulf of Mexico. Its Canyon Oil Pipeline System will have the capacity to transport 200,000 barrels per day. It will originate at the Keathley Canyon area and deliver crude oil to the existing Green Canyon 19 platform, operated by Shell Pipeline Company, for delivery to the Louisiana market. Enbridge will also build the Canyon Gathering system, which will have the capacity to transport 125 million cubic feet of gas per day to the company's existing Magnolia Gas Gathering Pipeline for delivery to its Garden Banks Gas Pipeline.

BP signed long-term contracts to support these pipelines. They will provide Enbridge with low-risk, utility-like cash flows and returns. BP also has the option to connect future production from its emerging Paleogene portfolio into the new pipelines, which Enbridge is designing to accommodate future discoveries. As such, the project will provide Enbridge with stable and predictable cash flow as well as future growth opportunities.

Lots of growth is coming down the pipeline

Enbridge had already secured a lot of growth before adding these new pipeline projects to its backlog. The company ended the second quarter with a secured capital program of 24 billion Canadian dollars ($17.7 billion). Those projects span all four of its core franchises (liquids pipelines, gas transmission, gas distribution and storage, and renewables). It expects those projects will come online through 2028. It has now extended its growth visibility by another year with the addition of the new pipelines in the Gulf of Mexico.

The company has green-lit several new projects this year. In the second quarter, Enbridge and its partners approved building the Blackcomb Pipeline, which will increase gas transportation capacity in the Permian Basin. The company also approved an expansion of its Gray Oak Pipeline, fueled by the growing demand for oil transportation capacity from its customers. In addition, Enbridge will build the Orange Grove solar farm in Texas. That $250 million project will supply power to AT&T under a long-term contract.

Enbridge also enhanced its operations and growth prospects by closing the acquisitions of three gas utilities from Dominion Energy. The deals will be accretive to its earnings and bolster its growth profile, driven by $3.7 billion of planned capital spending over the next three years.

The company's robust backlog and fortress-like financial profile power its view that it should be able to grow its earnings by around 5% per year over the medium term. That should support continued dividend increases of as much as 5% annually. Given the length of its backlog (and robust investment capacity), Enbridge appears well equipped to continue increasing its payout annually through at least 2029.

An elite dividend growth stock

Enbridge has done a terrific job growing its dividend over the years. That seems highly likely to continue, given its ability to keep adding new expansion projects to its backlog. It how has growth visibility through 2029. With a high dividend yield, low risk profile, and clear growth outlook, Enbridge is a no-brainer stock for those seeking a high-quality dividend payer to own for the long haul.

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Matt DiLallo has positions in Enbridge. The Motley Fool has positions in and recommends BP and Enbridge. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.