Two Reliable Dividend Shares that Have Provided Decades of Stability and Progression
Over the past few decades, we've witnessed numerous economic tremors, including the dot.com crash, financial crisis, and pandemic, which have left significant scars on numerous businesses, forcing many to slash their dividends due to plummeting profits.
On the other hand, some companies have managed to construct robust enterprises capable of withstanding even the most intense economic quakes. Enbridge (ENB -0.33%) and Oneok (OKE -0.42%) are two such stalwarts. They've been increasing their earnings annually for over a decade while guaranteeing dividend sustainability for even longer durations. These characteristics make them excellent income stocks for individuals searching for payouts that can withstand trying times.
Established for durability
Enbridge is an exceptionally reliable company. This Canadian pipeline and utility operator has been dispensing dividends for over 69 years and has raised its payout for 29 consecutive years.
The strength of Enbridge's dividend is primarily due to its incredibly stable earnings profile. The company currently obtains 98% of its earnings before interest, taxes, depreciation, and amortization (EBITDA) from cost-of-service or contracted assets, offering a significant forecast of its future earnings.
Enbridge has achieved its annual financial targets uninterrupted for 18 consecutive years and is well on course to meet them once again this year. Its earnings have only decreased once during this period, primarily due to the anticipated impact of crashing commodity prices and wildfires in Canada.
Enbridge has been working diligently to bolster the robustness of its earnings profile by selling assets whose earnings are vulnerable to commodity price volatility, and then reinvesting that capital into stable assets. For instance, last year it offloaded its stake in Aux Sable -- an operator of natural gas liquids (NGL) extraction and separation facilities -- to finance the acquisition of three stable natural gas utilities this year.
Enbridge is aggressively investing in expanding its portfolio of assets with stable earnings profiles. It has billions of dollars in commercially secured capital projects currently under construction, which should commence operations by the end of the decade.
These projects corroborate Enbridge's belief that it can expand its EBITDA by around the mid-single digits annually. This should provide ample impetus to continue raising its dividend.
Balancing commodity prices with high-octane expansion
Oneok has been highly durable for quite some time. The pipeline company has increased its adjusted EBITDA for 10 consecutive years, raising it at an impressive 15% compound annual rate, even during two major upheavals in the oil market. Additionally, it has presented more than a quarter-century of dividend stability and growth.
What's truly striking about Oneok's durability is that it carries a greater exposure to commodity prices than Enbridge does. It operates natural gas and NGL processing plants, whose profits are contingent on the value of the products they produce. Moreover, some of its other assets carry certain volume risk.
Oneok has maneuvered past these challenges by investing heavily in expanding its capacity in areas where production is on the rise. The company has also made several strategically profitable acquisitions, including Magellan Midstream Partners in a transformative $18.8 billion deal last year to diversify and enhance its midstream footprint. Furthermore, it acquired Medallion Midstream and a substantial stake in EnLink Midstream for $5.9 billion this year.
These acquisitions have placed Oneok on track to elevate its adjusted EBITDA from $5.2 billion last year to over $8 billion by 2025. It also has several more expansion projects set to commence operations by 2027.
These growth investments should allow the company to lift its dividend by 3% to 4% annually during the upcoming years while also buying back shares and enhancing its already robust balance sheet.
Two low-risk dividend shares
Enbridge and Oneok have demonstrated remarkable durability over the years. Regardless of the frequent dislocations in the market, they've consistently grown their earnings and dividends. This speaks volumes about their resilient, low-risk business models and unyielding expansion.
Both companies have evident growth prospects, which should translate into continued increases in their payouts. This qualifies them as excellent long-term investment choices for individuals seeking robust income.
In the context of the given text, here are two sentences that contain the words 'money', 'finance', and 'investing':
- For individuals who are interested in finance and investing for long-term income, Enbridge and Oneok have been proven to be reliable choices due to their consistent earnings growth and dividend increases over several decades.
- These two companies, Enbridge and Oneok, have managed to generate substantial profits and dividends despite the fluctuating commodity prices and market instabilities, making them attractive options for risk-averse investors seeking consistent money flow.
