Is Enbridge Stock a Buy Now?

Enbridge's (NYSE: ENB) big draw as an investment is its highly reliable dividend, which it has increased annually (in Canadian dollars) for three decades. There's just one problem for investors: The dividend growth rate for this Calgary-based pipeline operator has stalled over the last couple of years.

However, there's a light at the end of the tunnel, and that suggests that now could be a decent time to buy Enbridge. Here's what you need to know.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

What does Enbridge do?

Enbridge is lumped in with the midstream sector, which makes sense. Roughly 75% of its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is derived from its oil and natural gas pipeline operations. But the company does much more than collecting tolls for moving oil and natural gas around the world.

Image source: Getty Images.

Its third-largest business is owning regulated natural gas utilities. It is one of the largest natural gas distributors in North America following its acquisition of three gas utilities from Dominion Energy not too long ago. Like the fee-based pipeline business, regulated utilities offer reliable cash flows. However, they also provide a clear view of future growth because of government involvement in the capital investment process.

The last division in the mix is clean energy, which accounts for 4% of Enbridge's adjusted EBITDA. Investing in clean energy has been a long-term theme for the company, but management is only willing to put money to work in projects that provide reliable cash flows (like the rest of its business) and that make financial sense.

However, though a relatively small piece of the pie today, that clean energy segment allows the company to adjust along with the world around it. That's actually an important corporate goal, so clean energy fits very well in its portfolio.

Why buy Enbridge now?

Although Enbridge's business tends to be a fairly reliable dividend income producer over time, it still resides in the volatile energy sector. Given that fact, deep oil price downturns tend to set up the best buying opportunities for the stock. Yet if you're looking for a reliable dividend with a lofty yield, it is hard to ignore Enbridge's roughly 6% dividend yield today. That's especially true if dividend consistency is important to you, given the company's 30-year streak of annual increases.

There is just one problem: Growth in the company's distributable cash flow over the last couple of years has been a bit slow. Think in the 3% range, which is what the company is projecting for 2025 as well. As a result, management has been making miserly dividend hikes in the low-single-digit percentages.

One key underlying reason for this was the acquisition of those natural gas utilities from Dominion. The company has been focused on integrating those assets and solidifying its balance sheet. Slow dividend growth might lead some investors to question the case for making an investment here.

For 2027, management is anticipating a step up in distributable cash flow growth into the mid-single-digit percentages. That would allow the company to increase its dividend payouts by roughly the same degree. So there's probably a material increase in Enbridge's dividend growth rate on the horizon for investors who are willing to buy now and wait. The compensation they'll get for their patience is an above-average dividend yield today, which is hard to complain about.

Enbridge is boring, but that's the point

Enbridge isn't trying to be the fastest-growing energy company. Its goal is to be a slow, boring, and reliable energy company that throws off a pleasing dividend. Those regular payouts will, most likely, provide the lion's share of an investor's total returns on the stock over time, so growth investors probably won't ever be attracted to Enbridge.

However, if you are a dividend-focused investor, buying Enbridge shares now could set you up with a robust income stream that is set to start growing faster in just a couple of years.

Should you invest $1,000 in Enbridge right now?

Before you buy stock in Enbridge, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Enbridge wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $721,394!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of March 18, 2025

Reuben Gregg Brewer has positions in Dominion Energy and Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.