This Stock Yields 7%, Has Increased its Dividend for 27 Consecutive Years, and is Currently Attractively Valued

A primary advantage of a properly constructed dividend income portfolio is the opportunity to live off the dividends and receive an increase in pay each year. In order to successfully accomplish this, you must save enough money over the years.

Importantly, the more money you save and accumulate, the less yield your portfolio needs to provide. To be clear, the more money you have saved the easier it is to build a portfolio that can provide an adequate level of income. More simply stated, the more you have the less yield your investments need to provide.

The reason I mention this is that even with interest rates recently rising, it is still hard to find an adequate dividend yield. Moreover, the general rule is that the higher the yield that an investment pays, the riskier it is. Generally, I agree with that last statement.

Fortunately, there are exceptions to every rule. I believe that Enbridge Inc. (ENB) is one such exception. Enbridge is the largest midstream oil and gas company in North America. It was founded in 1949, is BBB+ rated (investment grade one notch below A) and provides a 7% yield expected to grow by 3% per annum.

In summary, Enbridge Inc. represents a high yielding income play that can act as a turbocharger for your dividend growth portfolios. Although I do not recommend exclusively investing in high-yield securities due to the risks mentioned above. This high-yielding dividend growth stock may be the exception to that rule.

Furthermore, I believe that Enbridge is currently attractively valued. Therefore, I feel it represents a sensible addition to portfolios needing to generate a little higher yield than most dividend paying stocks offer.

 

— Chuck Carnevale

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