Enbridge has always been one of Canadians’ favorite stocks.
Enbridge is one of my all-time favorite dividend stocks on the TSX market.
There aren’t many stocks like Enbridge, given what it offers.
If you are just starting to invest, you can probably consider investing in Enbridge. The stock is trading around $40 and cost averaging can seriously benefit you in the long run.
Consider buying 1 or 2 stocks each month and adding it to your portfolios. (Or however you want)
Quick quote from Enbridge website:
Enbridge has been paying dividends to its shareholders for over 65 years. In December 2019, we announced a 9.8% increase in our dividend per share, bringing the quarterly dividend to $0.810. This translates to a dividend of $3.24 per share on an annualized basis for 2020. Over the past 25 years, the dividend has grown at an average compound annual growth rate of 11%.
The Enbridge stock dividend increases over the years: (65 years and still counting!)
That’s 65 years of consistent dividend payments and increases (at a CAGR of over 11% per year).
Now this is really awesome guys!
In case you are wondering what CAGR means,
Here is an example of Investopedia:
Imagine you invest $10,000 in a portfolio whose returns are described below:
-
From January 1, 2014 to January 1, 2015, your portfolio increased to $13,000 (or 30% in the first year).
-
As of January 1, 2016, the portfolio stood at $14,000 (or 7.69% from January 2015 to January 2016).
-
On January 1, 2017, the portfolio closed with $19,000 (or 35.71% from January 2016 to January 2017).
Are dividends just for Enbridge or do we have something more?
Enbridge Stock Overview
As I said earlier, every Canadian investment portfolio should have a touch of ENB. (this is the TSX stock symbol for Enbridge).
Enbridge is a large Canadian company. It is extremely stable and dividends are paid on time once every 3 months. (or quarterly dividend payments)
If you are very new to the world of investing and this is your first article.
Dividends are free money from the company that hits your bank account once a month or once every few months.
In this case, once every 3 months.
All you need to do is hold the shares in your investment accounts on or before the dividend payment record date to be eligible for dividend payments.
Enbridge Stock Chart: (5-year chart)
That’s not very interesting, is it? (The growth trajectory of stocks, I mean)
The stock has been trading in the same range for 5 years. $35 – $60 almost.
Based on the current market price of C$40.72, the dividend yield stands at 7.96%. Not bad! It’s Excellent actually.
Enbridge Stock Dividend Growth (CAGR) Case Study
Let’s say you bought Enbridge stock around the beginning of 2017 at a price of around $45 (on average).
Initial investment: $10,000
Stock price: $45
Unit purchased: $10,000/45 = 222 shares
2017 annual dividend: $2.4130
2018 annual dividend: $2.6840
2019 annual dividend: $2.9520
2020 annual dividend: $3.2400
Now given that you have held the shares for 4 years with no increase or decrease in the number of shares.
Your total dividend earned will be: (per year):
2017: $535
2018: $595
2019: $654
2020: $719
Have you noticed the divided increase over the years (YOY)?
Compared to 2017, you now receive almost 35% more dividends in 4 years. (that’s free extra money for you.)
The total dividend earned over 4 years: $2,503 Canadian for your $10,000 initially invested.
That equates to almost $59 per month of free cash flow in 2020 for the $10,000 you initially invested.
So, should you invest in Enbridge stock?
I will say yes.
Remember that the $59 per month we talked about will be paid once every 3 months (59*3*4 times per year).
Instead of keeping money in your bank’s checking/savings accounts, you can probably dollar cost average and buy ENB stock on a downturn.
Remember that the dividend will continue to increase every year. That’s the benefit of holding Enbridge stock for a long time.
In the chart above, just look at the 2010 dividend: it is $0.8500.
Today, ten or ten years later, it stands at $3.24 per share. TThis represents a nearly 4x increase in dividends alone.
Conclusion
In this article, I have tried to educate my newbie readers about the benefit of holding stable and excellent blue chip stocks such as Enbridge.
Instead of putting money in your bank’s checking/savings accounts or one of the online digital banks at penny interest rates, it’s definitely worth considering investing in high-dividend blue-chip companies like Enbridge.
I hope this article added value and made you think otherwise.
Thanks for reading. Please let me know your thoughts and comments below.
