By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel consensus is bearish on Enbridge due to heavy CAD exposure, high leverage, and significant regulatory and environmental risks that could impact dividend stability and growth.
Risk: Heavy CAD exposure turning a 2-4% annual FX drag into potential coverage shortfalls if capex overruns coincide with higher rates.
Opportunity: None identified
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Pipeline companies can make great investments if you want a stable income. Most pipeline companies own assets that operate under regulated revenue frameworks or long-term contracts. That gives them the steady cash flow to pay dividends and invest in growing their operations.
Enbridge (NYSE: ENB) and Oneok (NYSE: OKE) are two of the top pipeline stocks. Here's a look at which is the better buy right now.
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Enbridge and Oneok have two of the best dividend track records in the pipeline sector. Canada's Enbridge has paid dividends for over 70 years and has increased its payment for 31 consecutive years (in Canadian dollars). Meanwhile, Oneok has delivered more than 30 years of dividend stability and growth. While Oneok hasn't increased its payment every year during that period, it has grown its dividend by almost 100% over the past decade.
Both companies currently offer high-yielding payouts backed by rock-solid financial profiles:
| Pipeline stock | Dividend yield | Leverage ratio | Dividend payout ratio | |---|---|---|---| | Enbridge | 5% | 4.5x-5.0x | 60%-70% | | Oneok | 4.7% | 3.5x | 85% or below |
While Enbridge has a higher leverage ratio, it still has a strong investment-grade credit rating. Further, it generates very stable cash flow, as regulated rate structures or take-or-pay contracts back more than 98% of its earnings. Enbridge also has a more diversified business model, including North America's largest gas utility franchise and a growing renewable energy platform.
Oneok has been increasingly diversifying its platform. The acquisition of Magellan Midstream a few years ago added refined products, crude oil, and export terminals to its business mix. Meanwhile, the company formed a joint venture (JV) with MPLX to build a $1.4 billion LPG export terminal, which should enter service in early 2028. Oneok has also been acquiring and developing more fee-based assets. As a result, three of its four business segments expect to generate 90% of their earnings from fee-based sources this year, with the fourth segment anticipated to generate 85% fee-based earnings.
Overall, both companies produce stable cash flows to cover their high-yielding dividends, which they further support with rock-solid financial profiles.
These pipeline companies should have plenty of fuel to continue increasing their high-yielding dividends. They're each investing in organic expansion projects that should come online in the coming years and supply incremental sources of stable cash flow.
Oneok is investing about $1 billion into two JVs with MLPX (the other is building a pipeline to support the LPG export terminal). Additionally, the company is a partner in the JV building the Eiger Express Pipeline (Enbridge is also a partner). This gas pipeline should enter service in mid-2028. Oneok also has a couple of smaller projects it expects to complete over the next year (the Medford Fractionator rebuild and the Bighorn processing plant). The company also sees future opportunities to expand its gas pipeline systems to support growing power demand by AI data centers. These projects support its plans to increase its high-yielding dividend by 3% to 4% per year.
Meanwhile, Enbridge has an even larger backlog of commercially secured growth capital projects. The company has secured 37 billion Canadian dollars ($26.5 billion) in projects it expects to enter commercial service through 2030. Meanwhile, it's pursuing another CA$50 billion ($37.8 billion) of expansions it could approve through the end of the decade. Those investments include new and expanded oil and gas pipelines, utility growth projects, and new renewable power projects. This backlog supports Enbridge's expectation of growing its cash flow per share at a 5% annual rate after this year, providing the fuel to grow its dividend by up to 5% annually.
While Oneok is a solid income investment, Enbridge could be even better in the future. It pays a higher-yielding dividend that could grow faster in the coming years (assuming a stable exchange rate). That could enable it to generate higher total returns. This higher-octane total return potential makes it the better buy right now.
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Matt DiLallo has positions in Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Oneok. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"FX volatility and higher leverage tilt the risk-reward toward Oneok despite Enbridge's larger backlog."
Enbridge's touted 5% yield and CA$37B backlog overlook heavy CAD exposure for US investors, where FX swings have historically cut total returns by 2-4% annually. Its 4.5-5.0x leverage exceeds Oneok's 3.5x even after Magellan, and Canadian utility regulation adds rate-case uncertainty absent in Oneok's US fee-based segments. The article ignores that 98% contracted cash flow still depends on stable Canadian energy policy, which has tightened on emissions and Indigenous consultations.
If CAD appreciates 10%+ and Enbridge secures faster US Gulf expansions, its diversified renewables and utility cash flows could outpace Oneok's 3-4% dividend growth target.
"Enbridge offers superior income-growth potential through regulated cash flows and a large project backlog, but only if financing and execution risks remain manageable."
Enbridge looks appealing for income via a ~5% dividend yield and a sizable backlog (CA$37B to 2030, plus potential expansions). Its regulated cash flows should underpin dividend stability, and a larger, diversified asset base helps. However, this is not risk-free: ENB carries ~4.5x–5.0x leverage and a heavy capex cadence that may require new funding, especially if rates rise or project costs overrun. Currency exposure (CAD/USD) adds volatility to USD returns, and the AI/data-center growth narrative for gas pipelines is speculative. The article glosses over execution risk and funding needs, which could dampen the upside if growth slows or financing costs climb.
Against this stance: ENB's large capex and high leverage make it vulnerable to higher financing costs and project delays; a cost overrun or regulatory/rate-case setback could erode expected dividend growth.
"The superior balance sheet of OKE makes it a safer long-term bet than ENB, despite the latter's larger growth pipeline and marginally higher yield."
The article frames ENB and OKE as stable income plays, but it glosses over the massive regulatory and execution risks inherent in their massive capital backlogs. ENB’s CA$37 billion backlog is impressive, but it faces significant political headwinds in North America regarding cross-border infrastructure and environmental permitting. While the 5-7% dividend yields are attractive in a high-rate environment, investors are essentially betting on the companies' ability to navigate a shifting energy landscape. OKE’s lower leverage ratio (3.5x) makes it the more resilient operator, whereas ENB’s higher leverage (up to 5.0x) leaves it more exposed if interest rates remain 'higher for longer' or if project costs inflate further.
The primary risk is that both companies are essentially yield traps if the transition to renewables accelerates faster than the demand for natural gas, rendering their multi-decade pipeline investments stranded assets.
"ENB's higher dividend growth is priced in but contingent on CA$87B backlog execution—a non-trivial regulatory bet the article treats as fait accompli."
The article's conclusion—that ENB beats OKE on dividend growth potential—rests on two shaky pillars: (1) ENB's CA$87B project backlog is presented as quasi-certain, but regulatory/permitting risk in Canada is severe and understated; (2) the 5% vs. 3-4% dividend growth math assumes stable CAD/USD, which masks currency headwind risk for US investors. OKE's 85% payout ratio and lower leverage (3.5x vs 4.5-5.0x) actually suggest more downside protection in a rate-shock scenario. The article also omits that ENB's 98% regulated/contracted cash flow is a double-edged sword—it's stable but capped, limiting upside if energy demand accelerates.
If ENB's CA$87B backlog faces material delays or regulatory rejection (plausible in Canada's current political climate), dividend growth stalls while leverage remains elevated; OKE's diversification into fee-based assets and lower leverage could then outperform on a risk-adjusted basis.
"FX-leverage interaction creates faster dividend risk for ENB than renewables-driven stranding."
Gemini's stranded-asset thesis underplays near-term mechanics: ENB's 4.5-5.0x leverage magnifies CAD depreciation losses already flagged by Grok and Claude, turning a 2-4% annual FX drag into potential coverage shortfalls if capex overruns coincide with higher rates. OKE's lower leverage offers clearer downside protection here, regardless of long-term transition pace.
"ENB faces refinancing/covenant risk from high leverage and multi-currency debt that could erode dividend growth in a prolonged high-rate environment."
FX drag is real, but the bigger overlooked risk is financing/refinancing. ENB's 4.5–5.0x leverage and multi-currency debt create refinancing and covenant risk if rates stay higher for longer and capex overruns hit funding needs. That could compress coverage and cap dividend growth even with a $37B backlog. OKE’s lower leverage is a meaningful cushion in a rate shock; the article underweights financing risk.
"ENB's dividend safety is undermined by hidden environmental remediation liabilities that OKE does not share."
Claude, you’re right to highlight the 'capped' nature of ENB’s cash flows, but the panel is ignoring the specific risk of the Line 3/5 legacy liabilities. ENB isn't just fighting for new permits; they are managing massive, ongoing environmental remediation costs that are rarely factored into the dividend coverage ratio. If those costs spike, the 5% yield becomes a liability rather than a feature. OKE’s fee-based model lacks this specific, open-ended litigation and environmental tail risk.
"Environmental tail risk is real but unquantified; leverage and FX drag remain the more measurable near-term risks."
Gemini flags Line 3/5 remediation costs—valid tail risk—but conflates environmental liability with dividend coverage. ENB's reported EBITDA already reflects known environmental accruals; the real question is whether *undisclosed* or *accelerating* remediation costs exist. OKE has its own tail risks (midstream asset stranding if demand collapses faster). The panel hasn't quantified: what's ENB's actual environmental reserve adequacy? Without that, we're speculating on unknowns vs. known leverage/FX headwinds.
The panel consensus is bearish on Enbridge due to heavy CAD exposure, high leverage, and significant regulatory and environmental risks that could impact dividend stability and growth.
None identified
Heavy CAD exposure turning a 2-4% annual FX drag into potential coverage shortfalls if capex overruns coincide with higher rates.