Where Will High-Yield Enbridge Stock Be in 10 Years?

The big draw with Enbridge (NYSE: ENB) is its lofty 5.1% dividend yield. And that yield is backed by 31 annual dividend increases. That's a great start for any investor looking to buy a high-yield stock, but the story gets even better when you consider where Enbridge will be in 10 years.

Enbridge isn't your typical midstream stock

The core of Enbridge's business is its midstream oil and natural gas operations. Essentially, it charges fees for facilitating the movement of these vital energy commodities worldwide. The price of the commodities moving through its system is less important than the volume. And given the importance of oil and natural gas to modern life, volume is high most of the time. In fact, the conflict in the Middle East may even increase demand for oil and natural gas from North America as countries reconsider energy security.

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Despite the ongoing growth of renewable power, Enbridge's midstream operations are likely to continue expanding over the next decade. But that's not the only growth opportunity, as the company's regulated natural gas utility business is also poised for expansion. Natural gas is increasingly replacing oil in the home heating market, but it is also in high demand among electric utilities, which are attempting to keep up with AI-driven demand for power.

So, more slow-and-steady growth from the company's oil and natural gas-linked operations is likely for years to come. Since Enbridge's midstream and regulated utility operations (which comprise four utilities) account for around 95% of its earnings before interest, taxes, depreciation, and amortization, it is well positioned to continue paying investors well. The company is calling for 3% distributable cash flow growth in 2026, but 5% each year over the longer term. Dividends should increase by around the same amounts.

The small, but vital, clean energy business

The one knock that a long-term dividend investor might have here is that Enbridge is heavily involved in carbon energy while the world is slowly shifting toward cleaner alternatives. Only, the company's goal is to provide the world with the energy it needs. For example, it has been growing its natural gas exposure because that is a cleaner-burning fuel than oil.

That said, Enbridge's third and final business line is actually clean energy. It is small today, but clean energy still accounts for a small share of the world's energy needs. This division will continue to grow over the next decade, keeping the company apace with the changing face of the energy market. And over the long term, that means Enbridge will remain a vital player in the global energy market. So even an investor who believes renewable energy is the future can comfortably buy this high-yield energy stock and hold it for 10 years or more.

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