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Two Dividend Stocks for Income: Realty Income & Enbridge Analyzed

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  //stocks-investing.news-articles.net/content/202 .. -for-income-realty-income-enbridge-analyzed.html
  Published in Stocks and Investing on Tuesday, December 30th 2025 at 12:40 GMT by The Motley Fool

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• 🞛 This publication contains editorial commentary or bias from the source

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Two Dividend Stocks to Consider for a Long-Term Income Stream (According to The Motley Fool)

For investors seeking reliable income alongside potential growth, dividend stocks remain a cornerstone strategy. The Motley Fool recently published an article highlighting two specific companies they believe are attractive "buy and hold" opportunities for those prioritizing high yields – Realty Income (O) and Enbridge (ENB). This analysis dives into why these companies were selected, their strengths, risks, and what investors should consider before adding them to their portfolios.

The Core Strategy: Dividend Growth & Stability

The article emphasizes a focus on dividend sustainability rather than simply chasing the highest yield. While a high yield is appealing, it's meaningless if the company can’t maintain or grow that payout. The Fool’s selection process prioritized companies with a history of consistent dividends and strong fundamentals suggesting they can continue to deliver for years to come. They also note the importance of considering total return – combining dividend income with potential stock price appreciation.

Realty Income: The Monthly Dividend King (Real Estate Investment Trust - REIT)

The first pick, Realty Income, is a prominent Real Estate Investment Trust (REIT). REITs own and operate income-producing real estate, distributing a significant portion of their profits to shareholders as dividends. What makes Realty Income particularly appealing is its "monthly" dividend payout – a rare feature that can be attractive for those seeking consistent cash flow.

• Business Model & Stability: Realty Income specializes in owning single-tenant properties leased to businesses considered “mission-critical.” These are companies whose services or products are essential, even during economic downturns. Think pharmacies (like Walgreens), grocery stores (Kroger), and discount retailers (Dollar General). This focus on recession-resistant tenants provides a degree of stability that many REITs lack. The article highlights Realty Income's impressive track record of 639 consecutive months paying dividends – earning it the nickname "The Monthly Dividend King."
• Yield & Valuation: As of late December 2025, Realty Income’s yield sits around 5.1%. While this is a solid yield, the article acknowledges that it's slightly below its historical average. This suggests potential undervaluation, or at least a less aggressive price. The Fool points out that REITs are often sensitive to interest rate changes; rising rates can increase borrowing costs and potentially depress valuations. However, they believe Realty Income’s strong portfolio and management team will allow it to navigate these challenges.
• Risks: The article mentions the risk of tenant defaults or lease renewals at unfavorable terms. While Realty Income's tenant selection process is rigorous, economic downturns can still impact businesses. Furthermore, changes in real estate market conditions could affect property values.

Enbridge: A Pipeline Powerhouse (Energy Infrastructure)

The second stock highlighted is Enbridge, a Canadian-based energy infrastructure company. Enbridge owns and operates a vast network of pipelines transporting oil and natural gas across North America. Like REITs, companies involved in essential infrastructure often enjoy stable cash flows and can support generous dividends.

• Business Model & Resilience: Enbridge’s business model is largely fee-based. They charge shippers for the transportation of energy products, regardless of commodity price fluctuations. This provides a level of insulation from volatile oil and gas markets. The article emphasizes Enbridge's significant backlog of secured projects, indicating continued growth potential. These projects generate predictable revenue streams that support dividend payments.
• Yield & Valuation: Enbridge currently offers a yield around 7.6%, significantly higher than Realty Income’s. This attractive yield is partially due to the company facing some regulatory and political headwinds (discussed below). The article suggests this could represent an opportunity for patient investors.
• Risks & Challenges: Enbridge faces several challenges, including regulatory scrutiny regarding pipeline construction and environmental concerns. The proposed Line 5 pipeline in Michigan has been a source of ongoing controversy, potentially impacting operations and future expansion plans. Furthermore, the transition to renewable energy sources poses a long-term risk to the demand for fossil fuels transported through Enbridge’s pipelines. However, the article argues that Enbridge is actively diversifying its business into renewable energy projects, mitigating some of this risk. The company's management team is also focused on improving investor relations and addressing regulatory concerns. The Fool notes that Enbridge's yield can be volatile due to these external factors.

Key Takeaways & Considerations for Investors

• Diversification: As with any investment strategy, diversification is crucial. These two stocks shouldn’t represent the entirety of an investor’s portfolio.
• Due Diligence: The article strongly encourages investors to conduct their own research and understand the risks associated with each company before investing. The Fool's analysis provides a starting point but isn't a substitute for individual due diligence.
• Long-Term Perspective: Both Realty Income and Enbridge are presented as "buy and hold" investments, meaning they’re intended to be held for years, not months or weeks. Investors should be prepared to weather market volatility and focus on the long-term income potential.
• Interest Rate Sensitivity: As mentioned earlier, both REITs (Realty Income) and energy infrastructure companies (Enbridge) are sensitive to interest rate changes. Investors should monitor interest rate trends and consider how they might impact these investments.

Disclaimer: This article is a summary of the Motley Fool's analysis and does not constitute financial advice. Investing in dividend stocks carries inherent risks, and investors should consult with a qualified financial advisor before making any investment decisions.