This 6%-Yielding Dividend Stock Is Low Risk and Poised for Solid Growth

Mick Jagger and the Rolling Stones were right when they sang "You Can't Always Get What You Want." In many cases, we have to be willing to settle for less than what we'd prefer. That's certainly often true with investing.

However, sometimes you can get everything you want -- or at least come close to doing so. If you're an income investor, I think Enbridge (NYSE: ENB) just might give you almost everything you could want in a dividend stock.

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A dividend that checks off all the boxes

Let's start with Enbridge's dividend program. I believe it checks off all the boxes for income investors.

First, the pipeline and energy company pays a forward dividend yield of 6.09%. Such an ultrahigh yield isn't unusual for Enbridge. Its dividend yield has topped 6% throughout most of the last four years.

Second, Enbridge has increased its dividend for 30 consecutive years. Only a handful of energy stocks can boast a longer streak of dividend hikes.

Those two points wouldn't mean much if Enbridge's dividend were in jeopardy of being cut. But that isn't the case at all. The company's distributable cash flow payout ratio is between 60% and 70%. This reflects ample financial flexibility to keep the dividends flowing and growing.

A stable, low-risk business

The key to Enbridge's stellar dividend track record is the company's stable, low-risk business. Enbridge is mainly known for its pipelines. It operates over 18,000 miles of crude oil pipeline, delivering roughly 30% of the crude oil produced in North America. Add to that roughly 72,500 miles of natural gas and natural gas liquids pipelines that transport around 20% of the natural gas consumed in the United States.

But the company's business extends beyond pipelines. Enbridge ranks as the largest natural gas utility in North America based on volume. Its renewable energy projects in operation or under construction have a total capacity of over 6.6 gigawatts, enough to supply electricity for 1.3 million homes.

Enbridge generates cash flow from more than 200 asset streams and businesses. Over 98% of its earnings before interest, taxes, depreciation, and amortization (EBITDA) is protected by regulatory agreements or take-or-pay frameworks. Over 80% of its EBITDA is protected from inflation through built-in escalators or regulatory paths to seek higher prices. Less than 1% of EBITDA is linked to commodity prices.

The company's balance sheet is strong, too. Enbridge's debt-to-EBITDA ratio is between 4 and 5, a manageable level. Its credit ratings are investment-grade. CEO Greg Ebel stated in the company's recent quarterly update that any business development deals Enbridge makes will either be "neutral or better to the balance sheet."

What about the potential impact of tariffs? Ebel said in the company's recent quarterly update that neither tariffs nor a global trade war should have a material impact on operations.

With such a steady, dependable business, it's not surprising that Enbridge has achieved its financial guidance for 19 consecutive years. Ebel believes the company is on track to extend that streak in 2025.

Poised for solid growth

Want more? Enbridge is also poised for solid growth. The company expects to grow its business by around 5% per year through the end of this decade. This bodes well for future dividend increases.

Multiple tailwinds should work in Enbridge's favor, including increased industrial demand, coal-to-gas conversions, and data center construction. Enbridge has a secured growth backlog of $28 billion. It expects to deploy between $8 billion and $9 billion each year on those capital projects. The company should have an extra $1 billion to $2 billion on top of that to allocate to new strategic projects or tuck-in mergers and acquisitions.

Income investors can't always get what they want. But with Enbridge, I think they'll come quite close.

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Keith Speights has positions in Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool has a disclosure policy.