3 Reasons to Buy High-Yield Enbridge Stock Like There's No Tomorrow | The Motley Fool

You need to do a deep dive on Enbridge ( ENB 0.04%) if you are looking for a high-yield stock in the energy sector. A big part of that is the stock's 5.9% yield, which is more than five times the yield you'd collect from an S&P 500 stock on average. However, there's way more to like about Enbridge than just its lofty yield. Here are three reasons you may want to consider buying Enbridge stock today. 1. Enbridge is in the safer energy space The energy sector is renowned for its high volatility. Oil and natural gas prices are the primary drivers of volatility in the upstream sector, where these commodities are produced. Energy prices, commodity chemicals, and refined products are the issues in the downstream segment of the industry, where oil and natural gas are processed. Enbridge, however, operates in the midstream. Image source: Getty Images. Midstream energy assets, such as pipelines , help to move oil and natural gas, and the products into which they are turned, around the world. The upstream and the downstream need the midstream to run their businesses. The big driver of the midstream is the volume that is moved, not the price of the products being moved. Midstream companies, such as Enbridge, are toll-taker businesses that generate reliable fee income throughout the entire energy cycle. In other words, Enbridge's business is actually rather boring. That's highlighted by the Canadian company's three-decade-long streak of annual dividend increases (in its home currency). If you are looking for a high-yield energy stock but you don't want to take on commodity risk, Enbridge's 5.9% dividend yield should be right up your alley. 2. Enbridge has a diversified business Enbridge's portfolio is just as interesting as its business model. Oil and natural gas pipelines make up the lion's share of its earnings before interest, taxes, depreciation, and amortization ( EBITDA ). However, it also has substantial exposure to regulated natural gas utilities and a small exposure to renewable energy assets. Natural gas utilities will be a core driver of growth for Enbridge. That's because the government oversight of these assets generally leads to regular capital investments to ensure reliability. Those capital investments, in a virtuous cycle, support rate increases. And all of this activity generally operates outside of Wall Street and commodity markets. This growth opportunity may not be as exciting as opportunities for large midstream projects, but it is reliable and provides a solid foundation for long-term growth. Meanwhile, the small exposure to renewable energy assets gives the company a toehold in an increasingly important part of the global energy pie. Although it may not be hugely significant to the company's business, it sets the stage for the future. This brings up the last key point. NYSE: ENB Key Data Points 3. Enbridge's goal is change Enbridge was once almost entirely focused on moving oil, largely from Canadian oil sands. However, the world has clearly been shifting from dirtier energy sources to cleaner ones. The big...

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