Raised a 31st straight year and covered 1.5x — but the payout and the leverage are both in the caution bands. Enbridge raised its quarterly dividend 3% to C$0.97, effective March 1, 2026, its 31st consecutive annual increase, and 2025 distributable cash flow of C$5.71 a share covered the C$3.77 of dividends declared that year 1.51 times. All figures are Canadian dollars as declared and reported, and the yield uses a Canadian-dollar price so numerator and denominator match. The tag is warn, not good, because the 66.0% DCF payout sits in the House 60-80% caution band and debt-to-EBITDA of 4.8x at December 31, 2025 is above the 4x line on the company's own adjusted basis — inside Enbridge's 4.5-5.0x target, and 5.1x by June 30, 2026. The earnings payout above 100% is not the grading base: GAAP earnings carry heavy depreciation, which is why the House grades these names on distributable cash flow. Tax note: Enbridge is an ordinary dividend-paying corporation (no K-1; US holders receive Form 1099-DIV). Canadian withholding tax applies at 25%, generally reduced to 15% for US residents entitled to treaty benefits with the proper paperwork on file with the payer or broker (without it, 25% may apply); withheld tax is generally deductible or creditable against US federal tax via the foreign tax credit, depending on the holder's circumstances — general information only, not tax advice. Dividends are declared in Canadian dollars, so the US-dollar payout varies with exchange rates.
Key risk: Debt-funded growth: a C$41 billion secured backlog at June 30, 2026 must convert to cash flow on schedule while interest expense is already rising; leverage above the company's target range leaves less room if projects slip or rates stay high.
Changes if: DCF payout falls under 60% for a full year, or debt-to-EBITDA stays above 5.0x, or the quarterly rate is held flat or cut.
- !DCF coverage C$5.71 DCF/share vs C$3.77 dividends declared in 2025 = 66.0% payout, 1.51x cover. Inside Enbridge's own 60-70% DCF payout target, but in the §3 60-80% caution band — flag, not pass. EPS payout 116.7% (C$3.77 ÷ C$3.23 GAAP EPS) is not the grading base: GAAP earnings carry heavy depreciation, which is why these names are graded on DCF.
- !Leverage 4.8x at Dec 31, 2025 on the company's management basis (adjusted debt C$98,959m ÷ adjusted EBITDA C$20,415m); above the §3 4x line but inside Enbridge's 4.5-5.0x target range. 5.1x at Jun 30, 2026 on the same basis, partly FX translation. Flagged under the filter F6 never-fails-alone rule, not a fail, because the DCF check does not fail.
- ✓Dividend history Annual rate raised every year 2016-2026: C$2.12 → C$3.77 (2025) → C$3.88 (2026); 31st consecutive annual increase declared Dec 3, 2025. No cut in 10 years.
- ✓Trap screen Yield 5.66% trailing on a CAD basis, under 8%; no cut; DCF payout under 100%; not a trap pattern. The yield is high because the payout is designed at 60-70% of DCF, stated on the card.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.