Is your portfolio diversified? There’s no shortage of great stocks to buy on the market right now, many of which are trading at significant discounts. One example is this dividend stock, which dropped 11% over the last 12-month period.
Here’s a look at that dividend stock right now and why you should consider it for your portfolio.
Meet Enbridge
Enbridge (TSX:ENB) is a company that is familiar to most Canadians. The company is best known for its massive pipeline network and, to a lesser extent, its utility operation. Both segments, along with a few others noted below, make this one of the must-have stocks for any portfolio.
And yes, that includes its very lucrative, if not insane, dividend.
There isn’t one thing in particular about Enbridge that makes it an insane buy right now, but rather a collection of factors.
First, let’s talk about the stock price. As of the time of writing, the stock trades at just over $48, which is mid-way between its 52-week high and low points.
If anything, the 11% dip in the stock over the trailing 12 months can be seen as an opportunity for prospective investors to scoop up a stellar long-term pick at a discount.
All parts of Enbridge collectively make it a better investment
I mentioned above that most investors are aware of Enbridge’s pipeline and utility business, but few realize just how lucrative those operations are.
The pipeline business includes both natural gas and crude segments. Collectively, they comprise the largest and most complex pipeline network on the planet. In terms of volume, the crude segment transports approximately one-third of North American-produced crude. The natural gas segment hauls nearly one-fifth of the natural gas needs of the entire U.S. market.
Also noteworthy is the fact that the pipeline business does not charge for network use based on the volatile commodity price. This means that the segment is largely immune from the volatile market price fluctuations.
Let that volume and the overall defensive appeal of Enbridge’s pipeline business sink in for a moment. And remember, that’s just one part of Enbridge’s operation.
The company also operates the largest natural gas utility business in North America. That title comes thanks to a trio of acquisitions completed last year that bolstered Enbridge’s utility business. Recall that utilities are incredibly defensive operations bound by long-term, regulated contracts.
Again, that adds to the appeal of this dividend stock, but we’re still not done.
Enbridge also operates a growing renewable energy business. Over the past two decades, Enbridge has dropped $8 billion into renewables. Today, that segment comprises over 40 facilities located in Europe and North America.
And like utilities, they are bound by long-term, regulated contracts that generate a recurring revenue stream.
Enbridge is a dividend stock worth buying
One of the main reasons why investors continue to flock to Enbridge is for the dividend that the company offers. As of the time of writing, Enbridge offers investors a quarterly dividend that carries an insane yield of 7.63%.
That handily makes Enbridge one of the best-paying options on the market. It also means that investors who can drop $40,000 into Enbridge can expect to generate an income of just over $3,000.
Prospective investors contemplating this discounted dividend stock should also note that Enbridge has provided annual upticks to that dividend for nearly three decades. This makes it a great dividend stock to buy not only while it’s discounted but also for the longer term.
In my opinion, Enbridge is an excellent long-term dividend stock that should be a core holding in any well-diversified portfolio. Buy it, hold it, and watch it (and your future income) grow.
