Enbridge Shares Plunge: Long-Term Buying or Dividend Danger?

On the surface, Enbridge (TSX:ENB) Stock prices appear to be anything but falling. In fact, shares of the energy stock are up 16% in the past year. However, after reaching an all-time high in 2025, shares have fallen again. After hitting around $70 per share, Enbridge stock is now down 7% since the end of September. Moreover, it has not shown any recovery so far.

So, what gives? Let’s take a look at what’s putting pressure on Enbridge stock, and whether that pressure is about to explode or cause a rise.

What happened?

Enbridge is a major North American energy infrastructure company. Its core activities include the transportation of crude oil and natural gas through pipelines, gas distribution companies and growing exposure to renewable energy sources and transition infrastructure. Even recently, the dividend stock announced multi-billion dollar upgrades to its “Mainline” crude oil pipeline system and made acquisitions in gas companies.

Yet this has brought problems. Despite its stable business model, some analysts believe Enbridge commands a premium compared to its peers or relative to the risks. That makes investors cautious, especially if the future outlook becomes bleaker. In addition, Enbridge has major capital commitments, such as $2 billion for the Mainline upgrade through 2028. At the same time, project cost escalations raise capital discipline concerns.

While Enbridge benefits from pipelines and gas distribution, the broader energy sector is undergoing a transition. There are increasing regulatory, environmental and market pressures on fossil fuel infrastructure. One item in the news is the legal and environmental risk associated with the Line 5 pipeline under the Great Lakes. If energy policy or permits become stricter, the valuation premium for infrastructure companies may shrink.

Is the dividend safe?

With all this considered, investors today probably want to know how safe the dividend is. For that we have to dive into the income. First, the company operates on a toll basis, meaning it earns fees from the transportation of energy and not from oil prices themselves. That fee structure ensures stable, predictable cash flow, even as crude oil prices fluctuate wildly. About 98% of income comes from regulated or long-term contracted assets, a key reason why investors consider this a stable income in any environment.

The recent second quarter results confirmed that the core business remains solid. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $5.2 billion, up 8% year over year. In addition, distributable cash flow was $2.8 billion, with full year DCF reaffirmed at $5.40 to $5.80 per share.

So as of now, the 5.7% dividend yield seems safe, after 29 consecutive years of increases. However, the payout ratio shows that there is still work to be done. Right now, that ratio stands at 130%, showing that the company needs to increase earnings and cash flow to keep growing its dividend and not get into trouble.

In short

Enbridge is suitable for long-term investors who focus on stable, compounding income. The pipelines and gas networks transport 30% of North America’s crude oil and 20% of its natural gas, and those volumes won’t disappear overnight, even during an energy transition. The dividend stock continues to expand into low-carbon assets such as renewables, hydrogen and carbon capture, providing a bridge to the next energy era.

However, major acquisitions and capital expenditures require disciplined financing. If interest rates remain high, debt levels could put pressure on cash flow. Projects like Line 5 continue to face legal challenges, which could lead to one-off costs. While Enbridge adapts, any major shift away from hydrocarbons sooner than expected could limit future pipeline growth. For now, income-oriented investors can still buy Enbridge stock for a strong long-term buy, not a flashy growth pick.