Enbridge stands as one of the largest energy companies globally, boasting a market capitalization exceeding $100 billion, according to recent research from The Motley Fool. For years, investors have been drawn to Enbridge (ENB -0.81%) primarily due to its attractive dividend yield, currently hovering around 5.8%, representing a significant return on investment. Enbridge’s history demonstrates a consistent track record as a strong, long-term investment, prompting the question: is it still a worthwhile buy today? The company’s competitive advantages are undeniably impressive, particularly when considering investments in businesses with enduring strengths. Enbridge’s sheer scale is evident – it operates North America’s most extensive pipeline network, facilitating the transportation of approximately 90% of Canada’s crude oil exports to the United States, alongside roughly 40% of all crude oil production across North America. This positions Enbridge as an industry giant, and a deep understanding of pipeline economics reveals that owning such a vital infrastructure network represents one of the most secure investment opportunities available. Pipelines remain the most cost-effective and efficient methods for transporting hydrocarbons over land, regardless of the distance or the specific output location. The construction of a new pipeline requires substantial upfront investment – often billions of dollars – and can take years to complete due to rigorous permitting processes. Consequently, pipeline operators typically experience strong cash flow generation once a project is operational, creating a durable asset essential to the entire hydrocarbon supply chain. This asset’s unique characteristics make it incredibly difficult for competitors to replicate, providing Enbridge with a considerable advantage.

While increasing regulatory scrutiny may limit future competition for some of Enbridge’s pipelines, the company’s substantial network offers a degree of protection. However, several headwinds are emerging for the hydrocarbon sector as a whole. Concerns regarding climate change, pollution, and the potential decline in demand for hydrocarbons pose significant challenges. Given that Enbridge primarily charges by volume for transport—similar to a toll road—a static or decreasing demand for hydrocarbons would directly impact the company’s revenue stream. It’s important to acknowledge these legitimate concerns, which is why only two specific investor profiles should consider Enbridge for their portfolios.

Buy Enbridge for these two key reasons. First, the company offers a compelling 5.8% dividend yield. Enbridge has a long-standing history of consistently increasing its dividend for decades, with minimal interruptions. This consistency stems from its toll-like business model, which generates substantial cash flows even during periods of market volatility. Because a significant portion of Enbridge’s revenue is tied to volume, rather than fluctuating commodity prices, the company can maintain profitability even in a bear market. For investors seeking reliable dividend income without sacrificing growth potential, Enbridge remains an excellent choice. Second, Enbridge provides bear market stability. To be clear, the company’s leveraged balance sheet and partial exposure to commodity prices will not entirely shield your portfolio from market fluctuations. However, mirroring the stability of its toll-like business model, Enbridge’s stock often exhibits less volatility than the average company during a downturn. Its beta, for instance, is approximately 0.87, demonstrating a lower degree of price fluctuation.

I personally admire Enbridge’s business model. However, the outlook for hydrocarbon demand over the next 20 to 30 years complicates the picture for younger investors. Nevertheless, for retirees seeking supplemental income and investors focused on preserving capital while maintaining potential income or upside potential, Enbridge remains a strong fit, even with a market capitalization exceeding $100 billion.