Enbridge's Reliable Business Model Supports Attractive Dividend Growth

Enbridge Inc. ENB is a leading midstream energy player that generates stable fee-based revenues. Due to the very nature of the business model, the company is not vulnerable to the volatility in oil and natural gas prices.

ENB is also well-positioned to generate incremental cash flows for shareholders. This fact is getting reflected in the midstream giant’s billions of secured capital projects, which include liquid pipelines, gas transmissions, renewables and gas distribution & storage.

Based on the stability of its business model with stable earnings and potential for additional future income, Enbridge expects its adjusted EBITDA for 2026 to lie in the band of C$20.2 billion to C$20.8 billion, implying a CAGR of 8% through 2023. Higher income means increased dividends for shareholders. Accordingly, the midstream energy major expects the dividend for 2026 to be C$3.88 per share, suggesting a CAGR of 3% through 2023. Notably, ENB’s dividend yield is currently 5.94%, higher than the industry’s 5.4%.

WMB and KMI Have Lower Dividend Yields Than ENB

Williams WMB and Kinder Morgan Inc KMI are two other midstream players and are known for transporting huge natural gas volumes. Thus, both WMB and KMI are well-positioned to capitalize on the growing demand for clean energy and are likely to generate handsome cash flows for shareholders.

Currently, the dividend yields of WMB and KMI are 3.3% and 4.3%, respectively. 

ENB’s Price Performance, Valuation & Estimates

Shares of ENB have jumped 10.5% over the past year compared with the 9.8% improvement of the composite stocks belonging to the industry.

From a valuation standpoint, ENB trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 14.66X. This is above the broader industry average of 13.57X.

The Zacks Consensus Estimate for ENB’s 2025 earnings hasn’t seen any revisions over the past 30 days.

Enbridge currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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