Can Enbridge Sustain Its 30-Year Dividend Growth Streak?

The average energy company has a dividend yield of around 3.1% today. Enbridge's (NYSE: ENB) dividend yield is materially higher at 5.8%. Should investors be worried that the high yield isn't sustainable?

One positive sign is the fact that the North American midstream giant has increased its dividend annually for 30 consecutive years. But that alone doesn't mean the dividend is safe.

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What does Enbridge do?

The energy sector is usually broken down into three broad groups. The upstream (energy production) and the downstream (chemicals and refining) are both highly volatile segments of the industry that are easily affected by commodity prices. Enbridge does not participate in either of those segments. It operates in the midstream. Midstream companies own energy infrastructure, like pipelines, that help to move oil and natural gas around the world.

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For the most part, midstream companies like Enbridge are toll-takers. They charge customers for using the energy infrastructure they own. Thus, energy demand is more important than the price of that energy. Demand for energy tends to remain strong no matter what is happening with energy prices because oil and natural gas are so vital to the world.

That said, only around 75% of Enbridge's business is tied to midstream assets. The rest comes from regulated natural gas utilities and renewable power assets backed by long-term contracts. These businesses also provide reliable cash flows. All in, Enbridge's business is built from the ground up to pay reliable dividends.

What about the balance sheet?

A good business model, however, can be thrown off-kilter if a company takes on too much debt. Notably, Enbridge's purchase of three natural gas utilities from Dominion Energy in 2024 cost around $14 billion, around $9.4 billion of which was cash. That's a lot of money, and it pushed the company's debt-to-equity ratio up from 1.2 times before the deal to around 1.5 times at the end of 2025.

Data by YCharts.

That said, the businesses acquired are reliable cash-flow generators. In fact, the company's debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) is actually lower today than it was at the start of 2023. And it isn't exactly out of line with the pipeline peer group, though it is higher than the most conservatively financed competitors. What's interesting is that Enbridge's leverage is right in line with some of the largest utilities, and its business has a notable utility component to it.

Data by YCharts.

It seems like Enbridge's leverage is reasonable overall, which should help assuage dividend concerns. Adding to the safety here is the fact that Enbridge's balance sheet is investment-grade rated, which means rating agencies don't see the company as a material financial risk.

What about geopolitical tensions?

One wildcard that is hard to get a handle on is the impact that tariffs and other geopolitical tensions could have on Enbridge, which is based in Canada. It has major operations in the United States, but part of the value of its pipeline infrastructure is that it connects Canada to the United States. That said, it has survived similar periods over the past 30 years without cutting its dividend (specifically between 2016 and 2020). There's no reason to believe that it can't do the same this time around, given the vital importance oil and natural gas play in the world economy.

If you are looking for a high-yield energy stock, Enbridge's dividend looks like it is sustainable. Actually, given the company's capital investment plans, management is calling for dividend growth to continue for the foreseeable future. There's no reason to believe it can't achieve this goal.

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Reuben Gregg Brewer has positions in Dominion Energy, Enbridge, and Southern Company. The Motley Fool has positions in and recommends Enbridge, Kinder Morgan, and NextEra Energy. The Motley Fool recommends Dominion Energy, Duke Energy, Enterprise Products Partners, and Tc Energy. The Motley Fool has a disclosure policy.