A Dividend Powerhouse on the Rise
Enbridge, the Canadian energy giant, has been on an unstoppable growth trajectory for nearly three decades, fueled by its impressive ability to expand its operations and cash flow. This year has been particularly transformative, with the company securing several new sources of growth that will likely propel its 6.5%-yielding dividend even higher.
Transformational Acquisitions
Enbridge has become North America’s largest natural gas utility operator, following its acquisition of three gas utilities from Dominion. This deal has significantly boosted its gas distribution capabilities, now supplying 22% of its adjusted EBITDA, up from 12% previously. The company expects these newly acquired utilities to grow their rate base at an 8% compound annual rate through 2027.
Unlocking Future Growth
In addition to its transformative acquisitions, Enbridge has also secured several other growth-enhancing deals. The company recently closed the $200 million purchase of additional docks and land adjacent to the Enbridge Ingleside Energy Center, unlocking future optimization and expansion opportunities. Furthermore, it acquired a 15% interest in the Delaware Basin Residue pipeline system in West Texas, extending its Permian strategy and customer service offering.
Organic Expansion Projects
Enbridge has also approved several new organic expansion projects, including the $700 million Canyon System Pipelines project, the $1.1 billion Sequoia Solar project, and the 177 MW Fox Squirrel Solar project. These projects will enter service between 2025 and 2029, providing significant visibility into the company’s long-term growth prospects.
Growth Outlook
Enbridge expects to grow its adjusted EBITDA at a 7% to 9% annual rate through 2026, fueled by its recent acquisitions and expansion project backlog. Beyond 2026, the company anticipates delivering around 5% annual earnings growth. This visible and increasingly secured growth should provide plenty of fuel to continue increasing its dividend.
A Steadily Rising Income Stream
With its enhanced growth profile, Enbridge appears poised to continue growing its dividend in the coming years, making it an attractive stock for income-focused investors.
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