Enbridge Inc: This “Forever Asset” Yields 6.2%
1 “Forever Asset” for the Next 100 Years
Today’s chart once again highlights some of my favorite dividend stocks around, “forever assets.”
I termed the phrase “forever assets” to describe a group of businesses that have paid out dividends for generations. And while they don’t often make headlines, many of these firms have crushed the broader market’s performance.
My approach? Buy them, stick the certificates in a drawer, and cash the dividend checks for decades. When you own stocks like these, you don’t have to worry about inflation, interest rates, or stock market crashes. If history is any guide, these businesses will keep chugging along, paying out dividends and making their shareholders a fortune.
For instance, you almost never hear about Canada-based Enbridge Inc (NYSE:ENB) in the news, which is just the way loyal shareholders like it. And with a yield over six percent right now, this little-known business looks like a good place to put money to work.
Enbridge, which owns energy pipelines, isn’t terribly exciting.
I’m don’t think even the CEO gets all that hyped about energy distribution. But the company makes a ton of money–$2.1 billion in 2016–and has increased its dividend every year since 1953. (Source: “Enbridge Dividend History,” Enbridge Inc, last accessed February 12, 2018.)
Think about that for a second. Though Vietnam, Watergate, the Cold War, the rise of Japan, the tech bubble, 9/11, and the housing bust, Enbridge went about its business, moving oil and gas across the country, and paying out more money to shareholders than it did the year before. The last time Enbridge did not pay a dividend, President Truman ran the White House, Walt Disney’s “Peter Pan” debuted in theaters, and a gallon of gas cost only $0.22.
Enbridge’s secret comes down to the nature of the pipeline business.
The industry enjoys significant barriers to entry, mainly due to regulatory restrictions and the high cost of new construction. Other forms of transportation, like trucks and rail, can’t move a barrel of crude from Point A to Point B as cheaply.
As a result, Enbridge can earn double-digit returns on capital for decades. Some businesses can earn profits like these from time to time. I can only list a few off the top of my head that have sustained those returns over such a long period.
For shareholders, this has created a profitable formula.
Since 1976, Enbridge has increased its dividend at a seven-percent clip. If you had bought and held the stock over that time, the yield on your original investment would be 132% today.
Shares have grown in value more or less in line with the dividend. Over that same period, Enbridge has generated an eye-popping total return, including distributions, of 10,050%.
Of course, you have no sure things when it comes to investing. No one can pick out the one quality that will guarantee a company’s success. But by choosing dominant, shareholder-friendly companies, and holding on for the long haul, you’ll probably do pretty well over time.
Dear Reader: There is no magic formula to getting rich. Success in investment vehicles with the best prospects for price appreciation can only be achieved through proper and rigorous research and analysis. We are 100% independent in that we are not affiliated with any bank or brokerage house. Information contained herein, while believed to be correct, is not guaranteed as accurate. Warning: Investing often involves high risks and you can lose a lot of money. Please do not invest with money you cannot afford to lose. The opinions in this content are just that, opinions of the authors. We are a publishing company and the opinions, comments, stories, reports, advertisements and articles we publish are for informational and educational purposes only; nothing herein should be considered personalized investment advice. Before you make any investment, check with your investment professional (advisor). We urge our readers to review the financial statements and prospectus of any company they are interested in. We are not responsible for any damages or losses arising from the use of any information herein. Past performance is not a guarantee of future results. All registered trademarks are the property of their respective owners
Sign up to receive our FREE Income Investors newsletter along with our special offers and get our FREE report:
5 Dividend Stocks to Own Forever
This is an entirely free service. No credit card required. You can opt-out at anytime.
We hate spam as much as you do.