The main reason why most income investors want to buy Enbridge (ENB 1.59%) is the high dividend, which currently yields 6.9%. However, you have to look deeper into this number to understand why this stock is so desirable. The list of benefits includes the dividend (but not just the yield), the diversified underlying business, and the expansion the company has undertaken.

1. It offers an attractive dividend yield

Enbridge’s 6.9% dividend yield is quite cheap compared to the overall market, which averages just 1.2% or so, and also compared to the energy sector, where the average yield is around 3.1%. So income-oriented investors will find Enbridge’s yield attractive both in absolute terms and relative to other options. But there’s another factor to consider here: The yield is also near the top end of its historical range. In other words, Enbridge’s dividend looks attractive relative to its own history, too.

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In addition, Enbridge has increased its payout annually for 29 years in a row. In addition, the payout ratio of distributable cash flow is well within management’s target range of 60 to 70%. The balance sheet is also healthy: debt is well within management’s target range of 4.5 to 5 times debt to EBITDA (earnings before interest, taxes, depreciation and amortization). In short, the dividend is on a solid financial foundation.

ENB dividend yield data by YCharts.

2. Enbridge is a toll collector

Equally interesting is Enbridge’s core business model. The company focuses on generating reliable cash flows from fees, regulated assets and contracts across its entire business. However, this list is important to review as it speaks to the very different segments of the portfolio.

The company’s core assets, which account for approximately 75% of EBITDA, are oil and natural gas pipelines. These are toll assets – customers pay to use the vital energy infrastructure that Enbridge owns. Another approximately 22% of EBITDA comes from natural gas utilities, which are regulated assets and generate reliable cash flows. The remaining EBITDA comes from renewable energy assets, whose revenues are generated through long-term contracts.

There are a few important takeaways from this. First, any company that owns Enbridge is a toll taker that generates reliable cash flows to support the dividend. Second, Enbridge is quite diversified compared to other midstream players.

3. Enbridge moves with the times

Diversification of the business is a good idea, but it is not just about creating different sources of income. Enbridge management is well aware that the world is moving away from dirtier energy sources and towards cleaner ones. For this reason, it recently agreed to buy three natural gas suppliers from Dominion Energy (D 0.05%)This move will reduce Enbridge’s dependence on the oil sector from 57% of EBITDA to 50%.

While natural gas is still a hydrocarbon fuel, it burns cleaner than oil and coal. Natural gas is expected to be a transition fuel that will be relied upon as the world moves toward much greater use of renewables, which still make up a small portion of the overall energy pie. But Enbridge isn’t ignoring clean energy; it has a small footprint in that area, too, contributing about 3% of its EBITDA. The goal isn’t to transform the company, but to provide the world with the energy it needs. Management is doing just that while slowly moving toward cleaner options.

All-round attractive

If you’re looking for a high-yield energy stock that you can rely on for the long term, you should probably buy Enbridge today. And if you decide to buy because of its high yield, attractive business, and targeted portfolio rebalancing, you might want to buy a lot of it. The stock is still attractively valued today, but that could be the case tomorrow as more investors realize how attractive it has become as a dividend stock.