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Enbridge generates very stable and predictable cash flow.
The pipeline and utility company has very conservative financial metrics.
It has plenty of fuel to invest in growing its operations while continuing to increase its high-yielding dividend.
Enbridge (NYSE: ENB) entered 2026 with a 5.8% dividend yield. That's several times higher than the S&P 500's yield, which is near a record low at around 1.1%.
While higher-yielding dividend stocks can have a higher risk profile, that's not the case with Enbridge. Its high-yielding dividend is very safe.
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Enbridge has paid dividends for more than 70 years. The company recently announced plans to increase its payment by 3% for 2026, marking its 31st consecutive year of dividend raises.
The Canadian pipeline and utility company generates very stable and predictable cash flow. Roughly 98% of its cash flows come from cost-of-service agreements or long-term, fixed-fee contracts. Enbridge's earnings are so predictable that it has achieved its annual financial guidance for 19 years in a row.
Enbridge pays out 60%-70% of its stable cash flow in dividends, enabling it to retain billions of dollars annually. The company also has a strong investment-grade balance sheet, backed by a leverage ratio within its target range of 4.5-5.0 times. As a result, Enbridge has ample financial flexibility to fund organic expansion projects and make bolt-on acquisitions.
The company currently has a multi-billion-dollar backlog of organic expansion projects under construction that should enter commercial service through the end of the decade. That gives Enbridge significant visibility into its future growth prospects. It expects to grow its cash flow per share at a 3% compound annual rate through 2026 and at a roughly 5% compound annual rate thereafter. That should support future dividend increases of up to 5% post 2026.
Enbridge's combination of stable cash flows, conservative financial metrics, and visible growth prospects puts its high-yielding dividend on a very sustainable foundation. It makes the energy company an ideal option for those seeking a safe and growing stream of passive income.
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Matt DiLallo has positions in Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool has a disclosure policy.
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