This magnificent dividend stock is partnering with Microsoft to harness the power of AI to improve its operations

Enbridge (ENB -0.51%) and Microsoft (MSFT 1.26%) it couldn’t be more different. The former operates legacy pipelines and utilities that have helped fuel the industrial economy for decades, while the latter provides the tools needed to advance the digital economy. However, despite their differences, these companies need each other to thrive in today’s world.

This is evident in a recent collaboration agreement between these companies, with Microsoft helping Enbridge harness its power artificial intelligence (AI) to improve its operations. Meanwhile, Enbridge provides the fuel data centers — like the ones Microsoft operates — need to power AI applications.

A digital collaboration

Enbridge recently revealed a collaboration with Microsoft and will use AI to drive significant advances in safety, emissions reduction and asset optimization PIPE and utility platforms. It is an extension of the digital transformation initiatives the company began in 2020 to increase productivity and efficiency.

Microsoft technology was the foundation of this strategy. Adopted a cloud-based approach, migrating workloads to Microsoft Azure. Enbridge also uses Microsoft 365 Copilot, Bing Enterprise and ChatENB, an internal chatbot that uses Azure. OpenAI service.

The new collaboration will enable Enbridge to use AI powered by Microsoft Azure machine learning during its operations. Some of its AI-based initiatives include:

• Energy optimizer: Enbridge will use AI to provide real-time operational information about how energy is transported in the most efficient way possible. This will save the company money and reduce emissions.
• Monitoring the right of way: The company will use AI to monitor the right of way more effectively. This approach should help improve threat detection and response, helping to reduce the risk of harm.
• Integrity engine: Energy infrastructure company will use AI to identify potential maintenance needs. This will increase security, reduce complexity and maintain the health of its assets.

Cost savings and optimizations are an important driver of earnings growth for Enbridge. The company aims to achieve C$200 million to C$300 million ($146.6 million – $219.9 million) in recurring earnings before interest, taxes, depreciation and amortization (EBITDA) savings per year. This would add 1% to 2% to annual EBITDA each year and is a significant factor for a company targeting annual EBITDA growth of around 5%.

AI powered growth accelerator

Cost savings are just one driver of revenue growth for Enbridge. The company is working to capitalize on the expected increase in power demand from AI data centers to expand its operations. These facilities use a significant amount of electricity, which could lead to accelerated growth in energy demand in the coming years.

For example, the company recently bought a trio of natural gas utilities FROM Dominion. The Utah gas company is already starting to see incremental demand from data centers.

Enbridge noted on its second-quarter earnings conference call: “This quarter, we added 50 megawatts (MW) under contract and have numerous additional natural gas supply inquiries to bring an additional 1.5 gigawatts of capacity (GW). This is just an example.

The company also mentioned, “Across our utility footprint, we they are engaged in additional early-stage discussions with data centers that we expect to translate into future growth.“ In addition to the accelerated growth of its utilities, Enbridge is seeking incremental expansion opportunities in its gas transportation business and renewable energy operations.

Microsoft has been on a purge power purchase great this year. The company introduced a a massive 10.5 GW deal Brookfield Renewables to help provide renewable energy to its US and European operations. This was the largest corporate power purchase agreement. Microsoft followed that up with a more than 800-MW deal Constellation Energy to restart a previously shut down nuclear power plant.

Enbridge is also capitalizing on growing demand for renewable energy from telecommunications and technology companies. Amazon is buying 100% of the power from its Fox Squirrel Solar project in Ohiowhile AT&T is the purchaser of all electricity produced by its Orange Grove Solar project in Texas.

Expansion projects like these will help further increase revenue for Enbridge. This will allow the company to continue to grow its cash flow and dividends.

The company has done a magnificent job paying dividends over the years. It has has paid dividends for nearly 70 years and has increased his pay over the past 29 years in a row.

Embracing the future should pay dividends for Enbridge

Enbridge is partnering with Microsoft to harness the power of AI to improve safety, reduce emissions and reduce costs. This will help increase its earnings in the coming years. In addition, the company is capitalizing on the growing need for low-carbon energy from technology companies to power their AI data centers.

These growth factors should increase the company’s earnings by approximately 5% annually, which should allow Enbridge to continue to grow its 6.5% yield dividend. That combination of growth and income could give Enbridge the power to produce an average annual total return of more than 10%. in the future. That makes it a lower-risk way to earn an attractive profit in the age of AI.