Enbridge Inc. (TSE:ENB) has declared a dividend hike for the current year to CA$0.915, payable on March 1st. This change elevates the dividend yield to 7.7%, a development that is expected to be well-received by its shareholders.

Our Latest Insights on Enbridge Enbridge’s Dividend Sustainability Questioned Despite the allure of a robust dividend yield, the sustainability of such payments warrants scrutiny. Prior to this declaration, Enbridge’s dividend payouts exceeded its earnings, accounting for 86% of its cash flows. This pattern suggests a prioritization of shareholder returns over reinvestment for business growth.

In the upcoming year, an 81.3% growth in EPS is anticipated. If the dividend trend persists, the payout ratio might hit 152%, potentially straining the company’s financials.

Enbridge’s Consistent Dividend History Enbridge has a notable history of consistent dividend payments. From 2013, its annual dividend has risen from CA$1.26 to CA$3.66, marking an 11% yearly growth. Such consistent and rapid dividend growth is a key trait for an income stock.

Challenges in Maintaining Dividend Growth Enbridge’s long-term shareholders have enjoyed steady dividend income. The company has achieved an 8.1% annual EPS growth over the past five years. However, with limited reinvestment back into the business, future growth rates may decelerate.

Conclusion

While the dividend increase is appealing, Enbridge may not be an optimal choice for income-focused investors. The stability of the payments is notable, yet the high payout ratio raises concerns. Investors might seek alternatives for income investments.

Stable dividend policies generally attract more investor interest. However, other factors should be considered before investing. For instance, we’ve identified 5 cautionary signs for Enbridge, with one being particularly significant. For those seeking high-dividend stocks, explore our selection of strong dividend payers.

Source: https://ca.finance.yahoo.com/news/enbridge-tse-enb-pay-larger-121725468.html