Is Enbridge the Perfect Choice for High-Yield Dividend Investors?

Enbridge: A Unique Energy Stock to Consider for High-Yield Dividend Investors

Enbridge has a somewhat unique business in the energy sector that could make it a great choice or a terrible one. If you are a dividend investor, then Enbridge's 7.6% dividend yield will probably be very attractive to you. So, too, will be the 29-year streak of annual dividend increases that back that yield. But before you buy this midstream giant, you need to have a better understanding of the actual business. It isn't as clean an energy play as you might want it to be, which might attract some investors while repelling others.

The midstream is a reliable niche

From a big-picture perspective, Enbridge is what you call a midstream company. The upstream is filled with oil and natural gas producers. The downstream is where refiners and chemical companies live. The midstream basically connects the two, helping to move oil and natural gas, and the products into which they get turned, around the world. The infrastructure that is used to do that includes pipelines, storage, and transportation assets, among other things.

It's costly to build midstream assets, but once they're built, they tend to provide reliable cash flows.

There's more than oil and gas going on here

That said, if you're looking for an energy stock that's focused on oil and natural gas, well, Enbridge might not work for you. That's because the company has a very specific goal of shifting its portfolio along with the world around it. There are two unique outcomes from this focus.

Enbridge isn't going to please everyone