Income-oriented investors focused on dividends often look first at companies with higher than normal yields, and while current dividend yield is certainly an important factor for investors looking for regular income, the size and speed at which companies tend to raise their dividend is another very important, but often less-considered factor by many in this space.
In this regard, investors who have bought shares in Canadian energy infrastructure company Enbridge Inc. (TSX:ENB)(NYSE:ENB) have done very well over the years.
The company’s stock has traded sideways for the better part of two years, despite the fact the company has maintained its commitment to consistently raising its dividend by double digits annually.
These dividend increases combined with a lack of forward stock price momentum have resulted in a current dividend yield of more than 5.4%, a very healthy yield for investors betting on continued long-term growth from this company.
One of the fundamental factors I consider most important with energy infrastructure companies such as Enbridge is the relative lack of sensitivity to commodities prices these companies have.
With pipelines generally able to achieve long-term capacity contracts with producers, the cash flows produced by a company such as Enbridge are less volatile in the long-term and allow for continued dividend growth in the future, making such companies excellent long-term plays for investors looking for a high-yielding equity to hold for years or even decades.
Invest wisely, my friends.
