Bull Market Buys: 2 Dividend Stocks to Own for the Long Run
If you are a dividend investor like me, you prize consistency in all market environments, bull or bear. A high yield backed by a dividend that gets cut is likely to lead to less income and a loss of capital. No thanks! This is why one of the first screens I use when looking for a stock is a company's history of increasing its dividend. Then, I look at the businesses behind the dividend. Enbridge (NYSE: ENB) and NextEra Energy (NYSE: NEE) both come out looking like stocks that dividend investors would want to own for the long run.
Canadian Enbridge is lumped together with the midstream energy sector. That's an appropriate place for it, given that around 57% of the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) comes from oil pipelines and another 28% from natural gas pipelines. It is, in fact, one of the largest midstream companies in North America, with a portfolio of energy infrastructure that would be difficult, if not impossible, to replace or replicate.
The pipelines and other midstream assets it owns are largely fee-driven, which results in fairly consistent cash flow regardless of what is going on with energy prices. But do the quick math -- this side of the company makes up 85% of EBITDA. The rest comes from a regulated natural gas utility (12% of EBITDA) and renewable power assets (the remainder). Regulated utilities are super boring and reliable cash flow generators, and the renewable power assets Enbridge owns are under long-term contracts.
Source Fool.com
