This 6.5%-Yielding Dividend Stock Continues to Add to its Massive Growth Backlog and Has Plenty More Growth Coming Down the Pipeline

Enbridge (NYSE: ENB) offers investors a monster income stream. The Canadian pipeline and utility currently yields 6.5%, which is several times higher than the S&P 500's 1.3% yield.

That lucrative income stream is only part of the draw. Enbridge also has a massive backlog of expansion projects to fuel its growth for several years. Add that growth to its income stream, and Enbridge could produce a powerful total return in the coming years, making it a great long-term investment opportunity.

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Adding more fuel to its growth engine

Enbridge recently updated investors on its growth prospects. The energy infrastructure giant noted that it has now secured $20 billion (in U.S. dollars) of expansion projects after recently adding another $1.7 billion in accretive new investments. Those latest additions are:

• Mainline capital investment: Enbridge plans to invest up to $1.4 billion through 2028 to improve the reliability and efficiency of its Mainline oil pipeline system.
• Birch Grove: The company approved an additional $276 million expansion of its T-North Pipeline to move additional natural gas supplies. It also expects to complete this project in 2028.
• T15 expansion: It sanctioned a $69 million expansion of its T15 project to double the capacity of the gas utility expansion project in support of Duke Energy's Roxboro gas-fired power plant. T15 should start commercial service in the 2027 to 2028 timeframe.

Those new projects further enhance and extend Enbridge's long-term growth outlook. It currently has projects across its four core franchises of liquids pipelines, gas transmission, gas distribution and storage, and renewables that should enter service through 2029. The company expects to place $15.9 billion of projects into service through 2027, with the remainder slated to come online in 2028 and 2029.

This massive expansion project backlog gives Enbridge tremendous visibility into its growth prospects. The company expects to deliver 7% to 9% growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) through 2026 and 5% annually after that. Meanwhile, it should deliver 3% annual distributable cash flow-per-share growth through 2026 and 5% beyond next year. This growth should support annual dividend increases of up to 3% through next year, potentially accelerating to as much as 5% after 2026. That positions the company to continue building on its three decades of annual dividend increases.

More coming down the pipeline

Enbridge currently sees plenty of opportunities to continue expanding each of its franchises. CEO Greg Ebel commented on the company's growth prospects at its recent investor day:

Global energy demand is growing and will require all forms of energy. Enbridge's diversified infrastructure footprint is uniquely positioned to meet this demand, delivering a balance of oil, natural gas and renewable power across five countries, 43 states, and eight provinces. All four of our growing franchises are opportunity-rich, and we're seeing approximately CA$50 billion ($34.5 billion) of combined new growth opportunities through 2030.

The company sees the biggest growth opportunity in gas transmission, at $15.9 billion. It's pursuing $6.2 billion of projects to increase gas supplies in the U.S. Gulf Coast region by supporting production growth in the Permian and offshore and moving that gas to support growing industrial and export demand. Meanwhile, the company is pursuing $9.7 billion in opportunities to support growing gas-fired power demand by utilities and data centers.

Enbridge is also pursuing expansion projects in liquids pipelines, totaling $6.9 billion; gas distribution and storage, $6.2 billion; and renewable power, $4.8 billion. The bulk of the growth potential in its liquids pipeline segment is lower carbon opportunities of $4.1 billion, such as carbon capture and storage pipelines and sequestration sites and infrastructure to support blue ammonia production and exports. Meanwhile, it's pursuing several opportunities to support growing power demand through additional expansions at its gas utilities and building more renewable energy capacity.

Securing these and other new projects would further enhance and extend Enbridge's long-term growth profile. They would put the company in an even stronger position to continue increasing its high-yielding dividend in the future.

High-octane total return potential

Enbridge's combination of a high dividend yield and solid growth prospects positions it to produce strong total returns for investors. If it can grow its cash flow per share in that 3% to 5% annual range, it could achieve total annual returns of 10% to 12% when adding in its high-yielding and steadily rising dividend. That's a very strong return from such a low-risk dividend stock.

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