Enbridge (TSX:ENB) has had a big rally over the past two years. Investors who missed the recovery are wondering whether ENB stock is still a good buy for a Self-Directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term total returns.
Enbridge stock price
Enbridge is trading near $68 per share at the time of writing, up from $44 just over two years ago.
Rate hikes by the Bank of Canada and the U.S. Federal Reserve in 2022 and 2023 caused the stock price to drop, which was as much as $59 in 2022. In late 2023, sentiment began to shift from fear of more rate hikes to anticipation of lower interest rates in 2024, leading to the subsequent recovery. The interest rate cuts that took place in 2024 and 2025 provided additional tailwinds.
Enbridge is using debt to finance part of its major growth program, which includes strategic acquisitions and development projects. The sharp increase in interest rates in such a short period has increased financing costs. Higher debt levels reduce profits and can lead to less money available for distributions to shareholders. At some point, analysts started floating the idea that Enbridge might be forced to cut its generous dividend.
That did not happen and the interest rate reduction has eased the pressure on the balance sheet.
Risks
Tariffs could start to drive up inflation in the United States in 2026, as companies that stockpiled before the tariffs are forced to replenish their inventories at higher prices. If inflation rises next year, the central bank will likely have to keep interest rates at current levels, or even raise them again, to keep inflation under control. In this scenario, Enbridge’s stock price would likely face new headwinds.
Possibility
Enbridge will benefit from revenue and cash flow contributions from its $14 billion acquisition of three U.S. natural gas companies in 2024. The company is also commissioning new development assets as they are completed. Enbridge continues to add projects to its development backlog, which now stands at $35 billion through 2030.
Growth in demand for oil, natural gas and electricity should drive steady additions to the capital program in the coming years.
Dividends
Enbridge has increased its dividend every year for the past thirty years. Continued distribution growth should be in line with expected annual distributable cash flow growth of 3% to 5% over the medium term. Investors who buy ENB stock at current levels can get a dividend yield of 5.5%.
Time to buy?
The broader market is due for a pullback, and Enbridge would likely have to give up some of its profits if that happens, especially if the dip is caused by expectations that rates could rise.
That said, income investors should feel comfortable owning the stock at this level. Any weakness would be seen as an opportunity to expand the position.
Investors who are more focused on capital gains and think interest rates will continue to fall could take a small position now. Those expecting rates to rise should wait to see if a better entry point emerges.
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