Could Buying Enbridge Stock Today Set You Up for Life?

The big reason for most investors to buy Enbridge (NYSE: ENB) is its attractive 5.8% dividend yield. But the story behind that yield is even more enticing than the yield. Here's why this Canadian midstream giant could set dividend lovers up for a lifetime of reliable dividend payments.

Enbridge's 5.8% yield is the first stop

Dividend investors often start first with a stock's dividend yield, which makes sense. On that score, Enbridge is very attractive. The S&P 500 index (SNPINDEX: ^GSPC) yields a miserly 1.2%. The average energy stock yields nearly 4%. And Enbridge is yielding a bit over 5.8%. It's clearly an attractive income choice relative to other options.

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That yield, meanwhile, is backed by three decades' worth of annual dividend increases, in Canadian dollars. That's notable because Enbridge is an energy company. The energy sector is generally known for being volatile, but Enbridge has still provided investors with consistency on the income side of the equation. The dividend growth target in 2026 is up to 3%, with growth in 2027 expected to pick up to as much as 5%.

Enbridge has a healthy combination of dividend yield and dividend growth that, taken together, add up to between 8% and 10%. Notably, that is the historical return investors generally expect from the broader stock market. If you like high-yield stocks that are boring and reliable, Enbridge could be the right pick for you based on its history and what management expects in the future.

Enbridge is built for change

The big story with Enbridge isn't actually what it does right now, though that is important. The really exciting thing is how Enbridge has changed over time. At one point, Enbridge largely operated oil pipelines. That's a fairly stable business within the energy sector because Enbridge charges fees for the use of its assets. The price of the commodities flowing through its system are less important than demand for energy.

Enbridge, however, is well aware that the world is shifting toward cleaner energy options. As such, it started to branch out into natural gas pipelines. Natural gas is a cleaner-burning fuel than coal and oil and is expected to be a transition fuel as the world integrates cleaner-energy options. That's exactly what has played out, highlighted by the ongoing closures of coal-powered electricity plants as natural gas-powered plants have become more prevalent in the utility sector.

But Enbridge isn't done with its transformation, and may never be. A key goal of the company is to change with the world around it. Which is why the company recently expanded its business in the regulated natural gas utility sector, buying three assets from Dominion Energy (NYSE: D). These are reliable cash flow generating assets that provide stable capital investment opportunities, as well.

Even that isn't the end of the story. For many years, Enbridge has been building renewable power assets, including offshore wind farms in Europe. These are supported by long-term contracts and provide the company with experience in a segment of the broader energy market that is likely to see ongoing growth for decades to come. Clean energy is a small part of Enbridge's business today, but this toehold could provide a valuable starting point for future growth.

Basically, Enbridge has deftly used earnings from dirtier energy options to steadily shift toward cleaner ones. Which is exactly the path the world is taking. And this fairly methodical and low-risk approach is what investors should really watch when they think about Enbridge's ability to provide them with a lifetime of reliable income.

Enbridge is kind of boring and that's a good thing

Although Enbridge is specifically looking to change along with the world's changing energy demands, that doesn't actually mean it is an exciting stock. It is, quite literally, built to be slow and boring. But that's exactly what a dividend investor looking to create a reliable income stream will want to see. Add in the lofty yield and solid dividend growth projections, and now could be the right time for you to add Enbridge to your dividend portfolio.

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.