Why I Continue to Buy More of This Amazing High-Yielding Dividend Growth Stock (and Will Likely Keep Adding in 2026)

Enbridge (NYSE: ENB) has been a stellar dividend stock over the decades. The Canadian pipeline and utility company has made dividend payments for more than 70 years and has increased its payout annually for the past three decades.

The energy company should have plenty of fuel to continue increasing its dividend, currently yielding 5.8%. That's why I recently bought more shares of this amazing income grower, which I expect to continue doing next year.

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Built to pay a durable dividend

Enbridge's diversified energy infrastructure platform produces very durable and predictable cash flows. Approximately 98% of the earnings generated by its pipeline and utility assets come from stable cost-of-service arrangements or long-term, fee-based contracts. Its low-risk business model produces such predictable cash flows that Enbridge has achieved its annual financial guidance in each of the last 19 years. That occurred despite significant market volatility during the period (two major recessions and multiple periods of energy market turbulence).

The company pays out a conservative percentage of its stable cash flow in dividends (60% to 70% annually). That gives it a comfortable cushion while allowing it to retain over 4 billion Canadian dollars ($2.9 billion) in free cash flow after paying dividends each year to fund growth capital projects.

Enbridge also has a strong investment-grade balance sheet. Its leverage ratio has been steadily falling and was at 4.7 times at the end of the second quarter as it trends toward the lower end of its 4.5 times to 5.0 times target range. That low-leverage level gives it an additional CA$5 billion ($3.6 billion) of annual investment capacity to fund expansion projects and make bolt-on acquisitions.

The company's combination of extremely stable cash flows and conservative financial metrics provides a solid foundation for its high-yielding dividend.

A fully fueled growth engine

Enbridge has a vast pipeline of organic expansion projects under construction and in development. The company ended the second quarter with CA$32 billion ($22.8 billion) of secured capital projects. Its projects ran the gamut from oil pipeline expansions and new gas pipeline projects to utility growth capital projects and new renewable energy developments. It had secured growth capital projects with in-service dates through 2029. This backlog provides a lot of visibility into the company's long-term growth prospects.

Meanwhile, Enbridge is pursuing another CA$50 billion ($36.5 billion) of future investment opportunities it could secure through 2030. While these projects span its four core franchises, nearly half involve expanding its gas transmission systems. Catalysts fueling these expansion opportunities include growing export demand (for liquefied natural gas (LNG) and to Mexico), supplying new gas-fired power plants, and powering data centers. The company recently announced that it has secured two additional gas transmission projects, adding to its backlog and further enhancing its long-term growth visibility.

Additionally, Enbridge has ample financial capacity to make more bolt-on acquisitions as opportunities arise. For example, it bought a 10% stake in the Matterhorn Express Pipeline for $300 million earlier this year. The company also has the capacity to complete larger deals when the right opportunity arises. In 2023, it capitalized on a once-in-a-generation opportunity to buy three large-scale U.S. gas utilities at a historically attractive price. The $14 billion deal created the largest gas utility platform in North America.

Enbridge estimates that its investments to expand its energy infrastructure platforms will fuel 3% compound annual cash flow per share growth through next year. It expects its growth rate to accelerate to 5% annually after 2026 as tax rates level out. This supports its expectation of delivering dividend growth within the same range.

A top-tier, high-yield dividend growth stock

Enbridge has done an amazing job growing its dividend over the decades. It should have ample fuel to continue growing its payout, given its strong financial profile and extensive backlog of expansion projects. That attractive and steadily growing income stream is why I continue buying shares of Enbridge, something I expect to keep doing in 2026 and beyond.

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