Enbridge (NYSE: ENB) and Energy Transfer (NYSE: ET) are rivals in the North American midstream sector, sharing similarities and differences in their business models and track records. While Energy Transfer may offer a higher yield, it’s crucial to delve into the specifics before making a decision as Enbridge, with a lower yield, could potentially be the superior dividend stock for your investment portfolio.
Both Enbridge and Energy Transfer are involved in the midstream sector, owning energy infrastructure assets such as pipelines for transporting oil and natural gas globally. This sector is known for its reliability as it operates on a fee-driven basis, unaffected by fluctuating commodity prices. Demand for energy remains strong even during periods of low oil prices, making these companies stable investments.
While both companies primarily own pipelines, Energy Transfer also has investments in compression and fuel distribution businesses, providing diversification within the oil and natural gas sector. In contrast, Enbridge’s portfolio extends beyond energy to include natural gas utilities and clean energy, aligning with the evolving energy landscape.
In terms of dividends, Energy Transfer boasts a higher yield at 6.7%, compared to Enbridge’s 6.2%. However, Enbridge has a track record of increasing its dividend annually for 30 years, showcasing its reliability and commitment to rewarding investors. On the other hand, Energy Transfer had to cut its dividend by half during the pandemic but has since resumed growth.
Ultimately, the choice between Enbridge and Energy Transfer depends on your investment goals and preferences. While Energy Transfer may offer a higher yield, Enbridge’s history of dividend growth and focus on cleaner energy sources could make it a more attractive option for long-term dividend investors.
For investors seeking dividend stability, Enbridge stands out as the clear winner in comparison to Energy Transfer. Enbridge’s focus on adapting to energy demand makes it a more attractive long-term option, although Energy Transfer offers a higher yield. However, when considering the income history of these companies, Enbridge becomes a more appealing choice due to its reliability and preparation for the clean energy future. Conservative income investors may find Enbridge to be the better investment option.
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Please be advised that Reuben Gregg Brewer holds positions in Enbridge, and The Motley Fool endorses and discloses its positions in Enbridge.
