Enbridge Inc (TSX:ENB)(NYSE:ENB) recently hiked its dividend 10% and investors that buy the stock today can lock in a yield of 5.5%. The company has a solid history of increasing its payouts over the years, and what’s more impressive is that Enbridge has done so even during the downturn in oil prices.
In 2013, the company was paying a quarterly dividend of $0.315. With its recent declaration that it will be paying $0.671 next quarter, that represents a growth of 113% in just five years, for a compounded annual growth rate of more than 16%. However, Enbridge expects to maintain hikes of around 10%over the next few years, which would mean it could take a little more than seven years for the dividend payment to double.
Enbridge’s stock has taken a beating this year with the share price down 14% and as oil prices continue to climb, especially as supply cuts have been extended, the stock could have a lot of upside. Enbridge has been able to be profitable amid a low price of oil and their results will get a big boost in an environment of higher commodity prices.
If Enbridge can continue to produce solid quarters like it has with four straight periods in the black, then the share price won’t stay this low for long. In the short term, there will likely be some volatility while oil prices stabilize. However, over the long term, Enbridge is as good a buy as you can find in the industry and its strong dividend-growth strategy will reward you for holding the stock for many years.