This 5.8%-Yielding Dividend Stock Has Made 3 Deals -- Including Nearly $3.2 Billion in Acquisitions -- in the Last 2 Weeks. Should Income Investors Be Worried or Excited?

Enbridge (NYSE:ENB) has been very busy over the past two weeks. The Canadian energy infrastructure giant has announced three transactions during that timespan, including nearly $3.2 billion of acquisitions. That's a lot of action for a company that operates sleepy utility and pipeline businesses. All that activity likely has the company's income-focused investors wondering whether they should be worried or excited.

As a long-term Enbridge investor, I'm excited about all the company's wheeling and dealing, as it should strengthen its 5.8%-yielding dividend and support continued growth. Here's why.

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What Enbridge is buying

On Aug. 26, Enbridge announced the acquisition of Salt Creek Midstream's crude oil gathering business. The $600 million deal added 500 miles of crude oil gathering infrastructure in the core of the Delaware Basin. It extended its presence deeper into America's busiest oil-producing region, strengthening its value chain to offer customers full wellhead-to-water integration through its oil pipeline systems and U.S. Gulf Coast export infrastructure.

Enbridge unveiled an even bigger deal on Sept. 9, agreeing to acquire Tallgrass Energy's crude oil business for $2.55 billion. The deal includes a 75% interest in the 1,050-mile Pony Express Pipeline, a 51% interest in the Powder River Gateway System, and 8.4 million barrels of storage capacity. These assets serve as a strategic bridge between the Bakken, Powder River, and Denver-Julesburg basins and Enbridge's existing crude oil infrastructure. This deal strengthens its already leading position in the North American crude oil transportation market and expands its footprint in the U.S. Rockies region.

In addition to their strategic importance, both deals also have notable financial benefits. It's buying highly contracted assets that will provide additional sources of durable cash flows. Enbridge also expects both acquisitions to be accretive to its distributable cash flow per share within the first year. Additionally, they both have embedded growth. For example, the Tallgrass deal includes the PXP2 growth project, a $300 million expansion that should enter service in late 2027. These deals should further enhance the sustainability of Enbridge's dividend and its ability to continue increasing the payout, which it has done for 31 consecutive years (in Canadian dollars).

How it's financing its growth

These deals enhance Enbridge's already strong growth profile. The company has 41 billion Canadian dollars ($29.6 billion) of secured growth capital projects underway. While its dividend consumes 60%-70% of its annual cash flow, Enbridge still has CA$5 billion-CA$6 billion ($3.6 billion-$4.3 billion) of annual free cash flow after dividends to reinvest in growth. Additionally, it has CA$5 billion ($3.6 billion) in annual debt capacity while maintaining its current credit ratings. That provides it with CA$10 billion–CA$11 billion ($7.2 billion–$7.9 billion) in annual funding capacity.

However, the company is still taking prudent action to maintain its financial strength. One way it did that was through a new joint venture to support investments in its Westcoast Pipeline System. On Aug. 27, private equity giants KKR and Apollo agreed to invest about CA$2.7 billion ($2 billion) to fund future expansion on this system. Enbridge will receive CA$700 million ($505 million) in cash at closing, which it can reinvest. Meanwhile, it's offloading a portion of the future capital commitments to expand this system to its partners. Capital recycling deals and strategic partnerships like this provide additional funding for new growth opportunities.

Enbridge also announced a stock offering following the Tallgrass deal. It's looking to raise at least CA$2.6 billion ($1.9 billion) to help fund its two acquisitions and create additional financial flexibility for future growth opportunities.

While the pipeline company has significant internal funding capacity, it's capitalizing on opportunities to tap external capital sources (joint-venture equity and stock sales) to maintain its flexibility. It shows that Enbridge isn't trying to grow at all costs, but strategically expand through accretive deals that should support its ability to continue growing its operations and high-yield dividend.

Excited by the future of Enbridge's dividend

Enbridge's three transactions over the past two weeks are strategically and financially sound. As a result, they should enhance the company's ability to grow its dividend in the future. That makes me even more excited to continue holding this high-quality, high-yielding dividend stock.

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