Is This 7.4% Yielder as Safe as It Was Last Year?

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Just over a year ago, I told you Enbridge‘s (NYSE: ENB) dividend was “definitely safe.”

At the time, the stock’s yield was 6.7%, cash flow was rising and the company’s payout ratio was expected to be 69% in 2021.

Additionally, Enbridge had raised its dividend for 26 years in a row.

Let’s see whether that dividend is as safe today as it was last year…

Enbridge moves about 30% of the crude oil produced in North America and 20% of the natural gas consumed stateside.

Cash available for distribution, a measure of cash flow, rose from $7 billion in 2020 to $8 billion in 2021, but it is expected to stall at $8 billion again in 2022. That’s not a problem so long as it doesn’t go backward. If cash flow shrinks, the dividend safety rating will be lowered.

Though the dividend was raised in January to CA$0.86 ($0.62) per share from CA$0.835 ($0.61) per share – making this the 27th straight year of dividend increases – dividends paid is actually expected to shrink this year to $5.1 billion from $5.7 billion in 2021.

Enbridge's Dividend Growth

The lower payout is reducing the payout ratio from 71% last year to a projected 64% for 2022.

The only blemish on Enbridge’s dividend safety is that its debt is too high, though management is in the process of lowering its debt level.

Due to the bear market and higher dividend, Enbridge’s dividend yield is now north of 7%.

Enbridge’s lower payout ratio, ample cash flow and nearly three-decades-long track record of annual dividend raises mean that its dividend is just as safe as it was a year ago.

Dividend Safety Rating: A

Dividend Grade Guide

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Good investing,


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