Enbridge (TSX:ENB) is up 22% in the past six months. Investors who missed the rally are wondering if ENB stock is still undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio targeting high-yield dividend income and total returns.

Enbridge share price

Enbridge (TSX:ENB) trades near $60 per share at the time of writing. The stock was as low as $45 earlier this year and recently hit a multi-year high near $62.

Enbridge's share price declined from $59 in June 2022 to $44 last fall as the central banks aggressively raised interest rates to get inflation under control. The stock bottomed out when the U.S. Federal Reserve signalled it was done raising rates.

Enbridge uses debt to fund part of its growth program. The jump in borrowing costs in 2022 and 2023 caused concern that the company might have to reduce its dividend to cover rising interest expenses. As soon as sentiment shifted from fears of additional rate hikes to expectations for rate cuts, ENB stock started to attract bargain hunters. Cuts to interest rates in Canada and the United States drove most of the gains in recent months.

Growth

Enbridge completed its US$14 billion acquisition of three natural gas utilities in the United States this year. The company is now the largest natural gas utility operator in North America. Revenue and cash flow from these businesses tend to be predictable and reliable.

Enbridge has a $27 billion capital program on the go that will help boost cash flow in the coming years. Additional acquisitions are also possible as the energy infrastructure industry consolidates. In recent years, Enbridge bought an oil export terminal, a renewable energy developer, and a stake in the new Woodfibre liquified natural gas (LNG) export facility being built in British Columbia. These moves help diversify Enbridge's portfolio and position the business to benefit from growth in global oil and natural gas demand, as well as the transition to renewable energy.

Dividend

Enbridge recently raised the dividend by 3% for 2025. This is the 30th consecutive dividend hike by the board. Investors should see the payout continue to grow as distributable cash flow rises.

At the time of writing, ENB stock provides a dividend yield of 6.3%.

Risks

Inflation rose in the United States in the past two months. If Donald Trump puts widespread tariffs in place next year, there could be a surge in inflation as businesses pass the extra costs on to consumers. In that scenario, the U.S. Federal Reserve could be forced to put rate cuts on hold or even raise interest rates again to get inflation back to its target level. Expectations for a rate hold or rate increase would likely put new pressure on pipeline and utility stocks.

The bottom line on ENB stock

Near-term volatility is expected, but buy-and-hold income investors should be comfortable owning ENB stock at this level. The dividend should be safe, and any weakness in the share price should be viewed as an opportunity to add to the position.