The unpredictability surrounding the U.S. trade policy and concerns about economic growth are taking a toll on investor sentiments, leading to the volatility in stock prices. However, those seeking steady income and stability amid uncertainty could consider top-notch dividend stocks with attractive yields.
For instance, investing in TSX stocks with strong business fundamentals, reliable dividend payouts, and a history of consistent distributions can provide worry-free passive income, no matter how the market fluctuates.
Against this backdrop, here is a top-notch stock offering a 6% dividend yield to buy in bulk.
Top-notch dividend stock with a 6% yield
Investors seeking a top-notch dividend stock could consider adding Enbridge (TSX:ENB) to their portfolios. The energy infrastructure company’s solid history of dividend growth, sustainable payout ratio, high yield, and visibility over future dividend growth make it a top option for generating steady passive income regardless of market conditions.
As a leading energy infrastructure company, Enbridge plays a significant role in transporting oil and gas across North America. Beyond traditional energy, the company has also ventured into renewable power generation and maintains a diversified utility portfolio, ensuring stable and predictable growth in all market conditions.
Enbridge’s business model is fortified by highly secured cash flows from long-term contracts, which shield it from the volatility of commodity prices. This stability translates into robust earnings and distributable cash flow (DCF) per share, supporting its commitment to rewarding shareholders through higher dividends.
Enbridge currently offers a quarterly cash dividend of $0.943 per share. This translates to an attractive annual yield of approximately 6%. Moreover, it has an uninterrupted record of dividend payments spanning 70 years and a remarkable streak of increasing dividends for 30 consecutive years. In addition, Enbridge stock has a sustainable dividend payout ratio of 60-70% of its DCF.
Overall, Enbridge’s low-risk cash flows and focus on rewarding shareholders with higher cash make it a compelling income stock.
Enbridge to reward investors with higher dividends
Enbridge is well-positioned to reward its shareholders with higher dividend payments in the years ahead. Its core liquid pipelines business consistently generates solid cash flows that support its payouts.
All its systems are expected to be highly utilized over the next decade as it connects major demand and supply markets in North America. Moreover, its liquid pipelines business will likely benefit from regulated contracts and take-or-pay agreements that provide revenue stability. Moreover, low-cost expansion opportunities augur well for growth.
Enbridge’s gas transmission and midstream business has minimal commodity risk and is poised to generate predictable cash flows. Meanwhile, the company’s regulated utility assets generate low-risk revenue, ensuring steady support for dividend payouts. Enbridge is also well-positioned to capitalize on growing renewable energy demand.
Enbridge’s management projects earnings and DCF per share to grow by 4-6% and 3% annually through 2026, respectively. Beyond that, the company anticipates an average annual growth rate of approximately 5% for DCF per share and adjusted earnings per share (EPS) in the long run. Enbridge’s annual dividend is expected to grow in line with its DCF per share, implying a mid-single-digit increase over the long term.
Overall, Enbridge’s diversified portfolio, contracted cash flows, low-risk commercial arrangements, and sustainable payout ratio position it well to deliver solid DCF per share, supporting its future payouts.