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How Many Shares of Enbridge Do You Need for $5,000 in Annual Dividends?

Enbridge Inc

(

TSX:ENB

It is one of Canada’s most recognized stocks for high dividends. Offering $3.77 annually per $62.73 share, ENB boasts a 6% dividend yield.

A 6% return rate is quite substantial; however, compared to Enbridge’s performance recently, it’s relatively modest. Between 2016 and 2022, the company’s share price remained stagnant, yet dividends continued to increase each year. During this time frame, the typical annual yield was around 7%. Interestingly, during the lowest point of the March 2020 pandemic-induced market downturn, one had the opportunity to purchase ENB stocks with an impressive 12% yield!

Today, Enbridge isn’t
quite
the high-return option it used to be. Nonetheless, it still offers a return rate that is roughly twice as much as that of the

TSX Index

Additionally, the stock has shown enhanced market performance over recent years, with gains of 43% during the past five-year period. As such, Enbridge’s dividend yield isn’t as robust as it once was; however, it remains quite substantial. In this piece, we will examine the number of Enbridge shares required to generate an annual income of $5,000.

dividend income

.

About 1,326 shares

If each share provides $3.77 annually in dividends, you’d require approximately 1,326 Enbridge shares to earn $5,000 yearly. This would amount to an investment of around $84,500. Below is the breakdown of this calculation:

As shown, owning 1,326 Enbridge shares would yield approximately $4,999 in yearly dividends – nearly $5,000. Nonetheless, this is just part of the narrative. In the following segment, I will delve into the subject of dividend growth and its impact on the total income potential from Enbridge stock.

Dividend growth

One distinctive aspect of stocks, which differs significantly from most bonds, is that their dividend amounts can vary considerably. Successful businesses typically increase these payouts, whereas struggling ones may decrease them or eliminate them altogether. Sometimes, firms that overestimate their performance might boost dividends unnecessarily, causing future fiscal issues that necessitate reductions. In contrast, bonds and Guaranteed Investment Certificates (GICs) usually maintain consistent interest rates.

With Enbridge, the prevailing pattern shows steady increases in dividends over time. This year, they increased their dividend by 3%. In the past three decades, the yearly compound dividend growth rate averaged at 9%. Therefore, this is a corporation with a consistent history of boosting its dividend payments significantly over extended periods.

It should be mentioned that inquiries can be made regarding the long-term viability of increasing dividends. Despite Enbridge’s strong history of boosting dividends, there have been instances where their payout ratio exceeded 100%—indicating they distributed more in dividends than what was earned as profits. Currently, however, Enbridge’s payout ratio stands at 88%, providing a reasonably secure position.

pipeline sector

Just keep in mind that no dividend is guaranteed.

Foolish takeaway

Should Enbridge’s operations continue smoothly, individuals purchasing its 1,326 ENB shares today could expect an approximate yearly dividend of around $5,000. Assuming past patterns hold true, these dividends may increase gradually in the future. While this growth isn’t guaranteed, I would consider the current $5,000 annual payment secure for at least the coming several years.

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How Many Shares of Enbridge Are Required to Earn $5,000 in Yearly Dividends?

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Fool contributor Andrew Button does not hold any shares in the companies listed. The Motley Fool endorses Enbridge. The Motley Fool has aDisclosure

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