In the stock market, investing in different sectors and in stocks with different scale implies different risks and opportunities. For example, a small-cap technology stock is likely to be a high-risk, high-return stock that can offer tremendous growth potential.
On the other hand, a large-cap telecommunication stock may not have as much growth potential, but is much safer and likely to pay an attractive dividend.
For long-term investors, companies that dominate stable or growing sectors often have the distinct advantage of being consistently profitable. If dividends are considered, then Enbridge (TSX:ENB) is an energy stock that’s well worth buying right now.
The company operates in an energy sector that is vital to the Canadian economy. Without energy, economic activity is paralysed. One problem with energy stocks for investors is that energy prices can fluctuate dramatically, increasing the risk of investing in energy stocks.
However, Enbridge, a leader among energy stocks, has a diversified portfolio that helps make cash flow more robust. The company’s primary objective is to serve the energy industry, operating the world’s longest crude oil and natural gas transportation system with over 28,000 kilometres of active pipelines in North America. In addition to its pipeline business, Enbridge has a large utilities business, which is one of the most defensive sectors. In addition, the company has a fast-growing green energy portfolio that continues to invest in the future of the energy industry.
With strong fundamentals and profitability, Enbridge has achieved 27 consecutive years of dividend growth, making it one of the highest-yielding and safest companies on the Toronto Stock Exchange (TSX).
From the dot-com bubble to the financial crisis of 2008 and 2009, Enbridge has executed well, generating billions of dollars in cash flow and consistently increasing its dividend.
In fact, in the last five years alone, the annual dividend has grown by more than 24%, a compound annual growth rate of 4.4%.
For investors who buy and firmly hold Enbridge stock, that’s the equivalent of getting a raise every year. Even better, today’s dividend yield has soared to 7.8% as the stock has pulled back from its highs.
So if a dividend stock needs to be added to a portfolio, then Enbridge is a no-brainer.
