Between Extremes: Enbridge and Enterprise as Stable High-Dividend Securities

In the current market environment, the S&P 500 Index offers a rather modest return of 1.2%. This makes the dividend yields of Enbridge at 6.3% and Enterprise Products Partners at 6.4% stand out in particular. However, the appeal of these two North American midstream giants lies not only in their impressive distributions but also in the robustness of their business model. The investment in costly and extensive infrastructure projects, such as pipelines, storage tanks, transport railways, and processing facilities, is the core of the midstream segment in which Enbridge and Enterprise operate. These essential energy facilities are leased to producers and refineries for fees. Regardless of current commodity prices, these companies typically profit from the demand for their services—and this demand remains consistently high even in times of crisis, as oil and natural gas are essential to the economy. A frequently cited counterargument is the gradual displacement of fossil fuels by renewable energies. However, this transition will certainly not be a short-term affair. Oil and natural gas remain significant despite advances in clean energy, and demand could possibly even increase. Thus, the services of Enbridge and Enterprise could remain in demand in the long term. What further sets Enbridge and Enterprise apart from their competitors is their reliability as a source of income. Enterprise has increased its distributions for 26 consecutive years, while Enbridge has continuously raised its dividend for 30 years. The consistency with which these companies provide their shareholders with a stable and growing income stream speaks for itself and makes them attractive investments in the long term.