This 6.5% dividend yielding stock just completed the final phase of a once-in-a-generation opportunity

last fall, Enbridge (ENB -0.19%) he made a bold stroke. The Canadian pipeline and utility giant has agreed to buy three natural gas utilities from Dominion in a $14 billion business. The transaction would create the largest natural gas utility franchise in North America.

At the time, Enbridge CEO Greg Ebel said, “Adding natural gas utilities of this scale and quality at a historically attractive multiple is a once-in-a-generation opportunity.” Although it took a little more than a year, the company finally closed on this generational opportunity to expand its gas utility business. The deal significantly improves the company’s ability to sustain and grow 6.5% yield dividend.

Closing the final phase

Enbridge recently announced that it has completed its acquisition of Public Service Company of North Carolina (PSNC) from Dominion. The deal adds more than 600,000 service customers in the state, which it serves with more than 13,000 miles of gas distribution and transmission. PIPES and other assets related to gas infrastructure.

The utility should provide Enbridge with stable, low-risk cash flow supported by government-regulated rate structures and steady gas demand. That cash flow should increase in the coming years as Enbridge invests in expanding PSNC infrastructure to support growing gas demand in its service region.

Closing the PSNC acquisition was the final phase of this transformational transaction. Enbridge previously closed its acquisition of The East Ohio Gas Company in March and closed its deal for Questar Gas Company in June.

The trio of gas utilities significantly expands Enbridge’s gas distribution platform. It will deliver 22% of the company’s adjusted annual earnings before interest, taxes, depreciation and amortization (EBITDA), up from 12% before the deal. It further diversified the company’s business while increasing exposure to low-carbon energy.

The new gas utilities also increased the company’s cash flow from stable regulated assets and improved its growth profile. Enbridge expects to invest C$5 billion ($3.7 billion) over the next three years in low-risk, quick-return projects. which will increase his earnings from these utilities.

Consolidating an already strong base

Enbridge has built one of the lowest risk businesses in the energy infrastructure sector. The company has a diversified platform focused on four main franchises: LIQUID pipelines (50% of EBITDA), gas transmission and midstream (25%), gas distribution and storage (22%) and renewable energy (3%).

About 98% of the EBITDA generated by those businesses comes from cost of service or contracted assets, which are very predictable and stable. As evidence, Enbridge has met its annual financial guidance for 18 consecutive years despite two major recessions and two additional periods of oil market turbulence.

The company aims to pay out 60% to 70% of its very stable cash flow to dividend investors. The rest they keep to invest in it great the stock of commercially guaranteed capital projects. Utility acquisitions have pushed its backlog to CA$24 billion ($17.8 billion) of projects it should complete by 2028. Those projects give it plenty of visibility into its future revenue growth.

The company expects these projects to contribute to EBITDA growth of approximately 5% annually. Meanwhile, it has additional investment capacity due to its strong balance sheet, which it can use to sanction additional expansion projects and make increased acquisitions, further boosting its growth rate.

With a strong financial profile and visible earnings growth, Enbridge should have enough fuel to continue raising its dividend. It could increase its dividend by up to 5% per year over the medium term, further extending a streak that is currently at 29 consecutive years.

An elite dividend stock

Enbridge has closed on a once-in-a-generation opportunity to add three high-quality gas utilities to its portfolio. These improve the stability of its earnings base, increase its diversification and enhance its growth profile.

Because of this, Enbridge is in an even stronger position to continue growing its dividend. That makes it an excellent dividend stock to buy for the long term.