Investors seeking reliable, high-yielding dividend stocks may find opportunities in companies that combine substantial payouts with stable cash flows and conservative financial strategies. Among these are Enbridge and Clearway Energy, two firms poised to provide robust dividend income and visible growth for years to come.
Enbridge, a Canadian pipeline and utility company, currently offers a dividend yield of 5.5%, significantly higher than the S&P 500’s 1.2%. The company sustains its dividends through stable cash flow derived from cost-of-service agreements and long-term contracts, which account for an impressive 98% of its earnings. Enbridge boasts a remarkable track record, having met its annual financial guidance for 19 consecutive years, even amidst economic downturns and challenges in the energy sector.
The company’s approach enables it to allocate between 60% and 70% of its stable cash flow toward dividends, while retaining billions for expansion projects. Enbridge’s balance sheet remains strong, with its leverage ratio heading towards the lower end of its target range of 4.5 to 5.0 times, allowing for additional financial capacity to pursue new investments.
With a multibillion-dollar backlog of growth capital projects, including expansions of oil pipelines, new gas pipelines, and renewable energy developments, Enbridge’s growth prospects are clear. It anticipates a compound annual growth rate of about 3% in distributable cash flow per share through 2026, with expectations for this growth to accelerate to around 5% annually thereafter. As a result, Enbridge aims to increase its dividend by up to 3% in the near term, with the potential for 5% annual increases following that, extending its impressive 30-year dividend growth streak.
Meanwhile, Clearway Energy, with a current dividend yield of 6.3%, supports its payout through one of the largest clean-power fleets in the United States. This fleet generates electricity from wind, solar, and natural gas facilities, selling it to utilities and large corporations under long-term, fixed-rate power purchase agreements (PPAs). These arrangements provide a stable source of cash flow to sustain Clearway’s high-yielding dividend.
This year, Clearway expects to generate $2.08 per share of cash available for dividends (CAFD), comfortably covering its annualized dividend of $1.78 per share. The excess free cash flow enables the company to invest in additional revenue-generating renewable energy projects. By 2027, Clearway anticipates producing between $2.50 and $2.70 CAFD per share, reflecting a more than 20% increase, which supports plans to raise its dividend to around $1.98 per share—an 11% increase from current levels.
Looking beyond 2027, Clearway’s increasing free cash flow and strong balance sheet grant it the flexibility to pursue various renewable energy investment opportunities. This includes repowering existing wind farms, enhancing battery storage at solar and wind facilities, and continuing to develop projects in partnership with its parent company, Clearway Energy Group. These initiatives are expected to drive annual CAFD per share growth of 5% to 8% or more beyond 2027, thereby supporting ongoing dividend increases.
In summary, both Enbridge and Clearway Energy are positioned to deliver stable and growing income streams, offering investors safe and steadily rising dividends. With clear earnings trajectories and growth plans set for the next several years, both companies stand out as favorable options for those in search of sustainable dividend investments.
