Retirement is when most of us hope to realize our dreams. Maybe that's a trip around the world or spending more time with a favorite hobby or the grandkids. No matter the retirement dream, it's easier to make it a reality by having a steady income stream. One of the ways to have that financial freedom in retirement is by owning a portfolio of solid dividend-paying stocks.
While plenty of stocks fit the bill, an excellent one to consider owning is Enbridge (NYSE: ENB). That's because the Canadian energy infrastructure giant pays a generous dividend supported by a predictable income stream and solid balance sheet. Even better, it expects to increase that lucrative payout at a 10% annual rate for at least the next three years, which will provide a retiree with more cash to do what they want in retirement.
Enbridge's dividends could help make your retirement dream a reality. Image source: Getty Images.
A great going in rate
Enbridge has treated dividend investors well over the years. The pipeline giant has now increased its payout for 23 consecutive years -- if we include 2018's planned 10% raise. Furthermore, those increases have been very generous considering that the company has boosted its payout by an 11.2% compound annual growth rate over the past two decades, including giving investors a 15% raise earlier this year. Those sizable increases are one reason why it pays such an attractive dividend right now, with it yielding a well above-average 4.8%.
That high-yield dividend is on a very sound foundation. For starters, roughly 96% of Enbridge's cash flow comes from predictable sources like long-term, fee-based contracts. Meanwhile, the company only pays out about 65% of its available cash flow from operations, which provides it with excess to help finance growth projects that have been the key to fueling dividend growth over the years. Additionally, the company has a solid balance sheet, backed by an investment-grade credit rating. In fact, the company is in the process of strengthening its financial situation by selling as much as 10 billion Canadian dollars ($7.9 billion) of non-core assets over the next few years, including CA$3 billion ($2.4 billion) by the end of 2018. That improving balance sheet will put its dividend on an even firmer foundation.
Image source: Getty Images.
A higher rate in the years to come
Not only does Enbridge pay a high-yielding dividend now but that payout should grow at a high rate for the next several years. That's because it currently has a stunning CA$31 billion ($24.4 billion) of expansion projects under way, which the company expects will drive 10% annual growth in cash flow per share through 2020, supporting its forecast for 10% yearly dividend increases over that time frame.