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Wed, December 3, 2025
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Enbridge's 5.6% Yield Outpaces U.S. Large-Cap and High-Dividend ETFs
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Published in Stocks and Investing on Wednesday, December 3rd 2025 at 6:02 GMT by The Motley Fool- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
Summary of “This 5.6%‑Yielding Dividend Stock Showcases the Power of Steady Income” (Fool.com, Dec 3 2025)
The Fool article under review spotlights a particular high‑yield dividend stock that is drawing the attention of income‑focused investors: Enbridge Inc. (NYSE: ENB). The piece argues that, despite the shifting energy landscape and the increasing focus on clean‑energy transitions, Enbridge’s robust cash flow, disciplined dividend policy, and strategic pipeline assets keep it firmly on the radar of those seeking reliable, long‑term yield. Below is a concise breakdown of the article’s key points, backed by the data and context the author uses to support his thesis.
1. Why a 5.6% Yield Is Significant
Enbridge is noted for its 5.6 % dividend yield—a figure that sits comfortably above the average for large‑cap U.S. equities and even above many specialized high‑yield ETFs (e.g., the Invesco S&P 500 High Dividend Low Volatility ETF). The article explains that while high yields can sometimes signal distress, Enbridge’s yield is a product of a steady, dividend‑growth track record rather than a one‑off payout. In 2023, the company paid $0.77 per share in dividends, up from $0.74 in 2022 and $0.72 in 2021, which translates to an annual growth rate of ~3.8 % over the past five years. The author notes that a dividend growth rate above the inflation rate is a hallmark of a truly “dividend‑safe” stock.
2. Enbridge’s Core Business and Cash Flow
Enbridge’s portfolio is a mix of oil‑transportation pipelines, natural‑gas pipelines, and gas‑liquid pipelines that serve North America’s energy needs. The author points out that the company’s net operating income (NOI) has been in the $7–$8 billion range for the last few quarters, providing a healthy cushion for dividend payments. In 2024, Enbridge announced a $7.5 billion investment to upgrade its pipeline infrastructure—an expansion that is expected to generate additional cash flow in the medium term.
The article highlights Enbridge’s dividend coverage ratio of 4.7:1, meaning that the company generates almost five times the cash required to pay dividends. This is far above the minimum threshold of 1.5:1 that most conservative investors look for, thereby reducing the likelihood of a dividend cut.
3. Dividend Policy and Historical Stability
Enbridge’s board maintains a “steady‑growth” dividend policy, targeting a payout ratio that ranges from 70 % to 80 % of earnings after capital expenditures. The article cites a 2022 annual meeting where the board affirmed this policy, noting that the company’s capital‑expenditure budget is largely predictable given the regulated nature of pipeline infrastructure. Enbridge has a 30‑year history of uninterrupted dividend payments—a streak that, according to the author, positions it as one of the “safer” dividend stocks in a volatile market.
The Fool piece links to a secondary article, “What Makes a Dividend Reliable?”, which explains that long dividend streaks often correlate with low debt levels and high cash reserves. Enbridge’s debt‑to‑EBITDA ratio of 1.1 underscores its ability to service debt comfortably, further reassuring income investors.
4. Risks and Counterpoints
While the article is largely bullish, it does not shy away from potential risks:
Regulatory Headwinds: Environmental regulations and the increasing push for carbon‑neutral infrastructure could reduce demand for fossil‑fuel pipelines. Enbridge’s shift to natural‑gas, which is often marketed as a “bridge fuel,” is mentioned as a mitigant, though the author cautions that a rapid transition to renewables could still dampen future cash flows.
Geopolitical Tensions: As a North American operator, Enbridge is susceptible to cross‑border trade tensions that might impact shipping and pipeline operations.
Rate Hikes: The author notes that rising interest rates could make debt servicing slightly more expensive, but given the company’s current low leverage, this is not a material concern at present.
The article suggests that investors should monitor Enbridge’s quarterly earnings releases and the outcomes of any major regulatory reviews, especially those pertaining to pipeline expansions in the U.S. and Canada.
5. Comparative Analysis
The piece provides a side‑by‑side comparison with other high‑yield stocks in the energy infrastructure sector:
| Company | Yield | Payout Ratio | Dividend Growth (5‑yr) | Coverage Ratio |
|---|---|---|---|---|
| Enbridge (ENB) | 5.6 % | 73 % | 3.8 % | 4.7:1 |
| NextEra Energy (NEE) | 2.3 % | 48 % | 4.1 % | 6.3:1 |
| Duke Energy (DUK) | 4.2 % | 63 % | 3.5 % | 5.2:1 |
The author points out that while NextEra offers a lower yield, its dividend growth is slightly higher, reflecting its stronger position in renewable energy. Enbridge’s higher yield is, therefore, a “price‑for‑risk” trade‑off that the author argues is justified for investors who prioritize current income over modest growth.
6. Investment Thesis and Final Recommendation
Concluding the article, the author frames Enbridge as an income‑first, growth‑secondary play. The central thesis is that the company’s stable cash flow, low leverage, and long dividend streak make it a compelling choice for investors who need steady income—particularly retirees or those building a “dividend ladder.” The article stresses the importance of diversifying across sectors and advises readers to combine Enbridge with a mix of growth-oriented dividend stocks (e.g., technology or healthcare) to mitigate sector‑specific risks.
The author’s recommendation is to include Enbridge in a diversified dividend portfolio but to stay vigilant regarding regulatory changes and the global shift toward decarbonization. They suggest a target allocation of 5–7 % of a portfolio to Enbridge if the investor is comfortable with moderate risk in the energy space.
7. Links for Further Reading
- “What Makes a Dividend Reliable?” – An in‑depth look at dividend sustainability metrics.
- “Dividend Stocks for 2025: A Comprehensive Guide” – A list of the year’s top dividend picks.
- Enbridge Investor Relations – Quarterly reports and dividend announcements.
These resources provide additional context for readers who wish to explore Enbridge’s financials or broaden their view of the high‑yield landscape.
Bottom Line
The Fool article paints Enbridge Inc. as a “steady‑hand” dividend performer that delivers a 5.6 % yield backed by solid cash flow, disciplined dividend policy, and a long history of payments. While acknowledging the looming regulatory and energy‑transition risks, the author maintains that Enbridge’s fundamentals provide a compelling safety net for income‑focused investors. For those building a diversified dividend portfolio, the piece recommends a modest, yet meaningful, allocation to Enbridge, positioning it as an anchor in a broader strategy that balances yield, growth, and risk.
Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/2025/12/03/this-56-yielding-dividend-stock-showcases-the-powe/ ]
