Enbridge(NYSE: ENB) operates a very predictable business. Its pipeline and utility assets generate very stable cash flow backed by long-term contracts and regulated cost-of-service frameworks.
Its business is so stable that the Canadian energy infrastructure company has now achieved its annual financial guidance for 19 years in a row. That's impressive considering the conditions it faced during that period, which included a financial crisis, a commodity price collapse, forest fires in the heartland of Canada's oil industry, a global pandemic, and rising inflation.
The company delivered strong results last year, taking advantage of a rare opportunity to acquire several high-quality U.S. natural gas utilities. It's in an excellent position to continue growing its earnings and cash flow. Because of that, investors can bank on Enbridge's 6%-yielding dividend.
One for the history books
In the company's fourth-quarter earnings press release, CEO Greg Ebel said 2024 was "a historic year for Enbridge."
The company grew its EBITDA (earnings before interest, taxes, depreciation, and amortization) by 13% to $13.3 billion, while its distributable cash flow (DCF) rose 6% to $8.5 billion. The biggest driver was completing what Ebel has called a "once in a generation" acquisition of three leading U.S. gas distribution companies for CA$19 billion ($13.4 billion). He added, "This transaction positions Enbridge as the owner of North America's largest natural gas utility franchise and complements our existing low-risk business model, and each of the utilities is well-positioned to serve growing natural gas demand in North America."
Enbridge also benefited from placing $3.5 billion of organic expansion projects into service last year across its four core franchises (liquids pipelines, gas transmission, gas distribution, and renewable power). The company also closed three smaller tuck-in acquisitions last year to establish a Permian natural gas footprint and enhance the position of the Enbridge Ingleside Energy Center, a leading crude oil export terminal.
Plenty of room for expansion
The company's heavy investments last year give it lots of momentum heading into 2025. It expects to grow its adjusted EBITDA to a range of $13.7 billion to $14.2 billion, an 8% to 11% rise from last year. And it anticipates delivering up to 5.4% more per share in DCF, with that number slowed somewhat due to some tax legislation headwinds and the share dilution from the utility acquisitions.
That upward trend should continue in 2026 and beyond. Enbridge approved $5.7 billion of new organic expansion projects last year, adding to its long-term growth drivers. Notable new projects include:
Tennessee Ridgeline: The $1.1 billion expansion of its Tennessee Natural Gas system will help supply a new natural gas power plant when it enters service next year.
Gulf of Mexico (also known in the U.S. as the Gulf of America): Projects to support BP's Kaskida and the Sparta development by Shell and Equinor, which it expects to complete in 2029.
North Carolina gas distribution: Enbridge's gas utility acquisition came with built-in growth drivers, including two major projects in North Carolina. It's building the Moriah Energy Center, a liquefied natural gas facility to enhance reliability, and the T15 Reliability Project to connect its system to Duke Energy's 1.4 GW Roxboro gas-fired power plant. These projects have in-service dates in 2027 and 2028.
Solar: Enbridge is building three large-scale U.S. solar energy projects backed by long-term power purchase agreements with Amazon, AT&T, and Toyota that should enter service by next year.
These additions enhance and extend its backlog and growth outlook. Enbridge entered 2025 with $18.4 billion of projects under construction that should start commercial service through the end of this decade. They should help support 3% to 5% annual DCF per share growth over the next several years. That should give Enbridge the fuel to continue increasing its high-yielding dividend -- which it's raised for 30 consecutive years -- at a similar rate.
A model of consistency
Enbridge's low-risk pipeline and utility assets generate very predictable earnings, and that provides the stable cash flow to pay an attractive dividend and continue investing in expanding its energy infrastructure. The company has a lot more stable growth ahead. Because of that, it's a great stock to buy and hold for a steadily rising income stream.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Matt DiLallo has positions in Amazon and Enbridge. The Motley Fool has positions in and recommends Amazon and Enbridge. The Motley Fool recommends BP, Duke Energy, and Equinor Asa. The Motley Fool has a disclosure policy.
