To find quality dividend stocks that can give you the most bang for your buck, you have to do more than just screen for stocks with high yields and low payout ratios. That won’t tell you the whole story about a stock, much less if its payout is safe and sustainable. Ratios can change over time, and it’s also important to understand a company’s business and financials to gauge whether it can truly be counted on as a solid income-producing investment over the long haul.
One stock that might be easy to overlook is Enbridge (ENB). The Canadian-based oil and gas stock has a payout ratio that’s normally above 100%. But while that may seem concerning, its stable operations actually make it an ideal option for long-term dividend investors. Here’s why this can be a solid pillar to build your portfolio around.
The company has consistently met its guidance
Enbridge is a leading infrastructure company in the oil and gas industry, with its pipelines connecting supply basins throughout North America. Its business model is stable and is anchored with long-term contracts, making Enbridge a fairly consistent company to invest in.
In 2025, the company had another solid year, with its adjusted earnings rising by 9% to 6.6 billion Canadian dollars. Enbridge also has an impressive track record for meeting or exceeding its financial guidance for 20 consecutive years.
Dividend investors might make the mistake in assuming its dividend is risky since the company’s payout ratio is more than 100%, but Enbridge evaluates its dividend based on distributable cash flow (DCF), and that rose by 4% last year, and it expects it will continue growing. As long as DCF remains strong, as it has been for Enbridge, the dividend is not something investors need to worry about.
Enbridge’s dividend is not only safe, but it has been growing for decades
What makes Enbridge particularly attractive as a dividend stock is that, as the business has been growing, so too has the dividend. Enbridge has increased its payout for 31 consecutive years, giving investors plenty of incentive to hold the stock in their portfolios for the long haul.
Currently, the stock yields 5.3%, which is more than four times the rate of the S&P 500 average of 1.2%. With a fairly safe payout backed by strong financials, a growing dividend, and a high yield, Enbridge is one of the best income stocks you can add to your portfolio today. In the past five years, it has risen by 49%, and when including its dividend, its total returns are up around 105%.
— David Jagielski
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Source: The Motley Fool
