Enbridge (TSX:ENB) recently gave back some of its 2024 gains. Investors who missed the surge in recent months are wondering if ENB stock is now cheap and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) focused on dividends and long-term total returns.

Enbridge stock

Enbridge trades close to $58 per share at the time of writing compared to around $62 a few weeks ago. Despite the pullback, the stock is still up 21% in 2024.

Interest rates have been the big story for pipeline and utility stocks over the past two years, and that remains the case today.

Enbridge uses debt to fund part of its growth program, which includes acquisitions and organic development projects. The sharp increase in interest rates in Canada and the United States through the second half of 2022 and much of 2023 triggered concerns that Enbridge might have to trim the dividend to preserve cash as debt costs soared. This led to a pullback in the share price from $59 in June 2022 to a low of around $44 in the fall of 2023.

Around that time, the central banks said they were done raising interest rates. Market sentiment then shifted from fears of higher rates to expectations of rate cuts. Bargain hunters moved into the stock, sending it gradually higher. As rate cuts emerged in Canada and the United States in the past six months, Enbridge's rally picked up steam.

The recent dip is due to new concerns that the U.S. Federal Reserve is not going to reduce rates as quickly or by as much as previously anticipated in 2025. In fact, the Fed recently said it is only targeting two cuts of 0.25% in 2025 compared to the four cuts expected just a few months ago. Sticky inflation and a tight jobs market are forcing the central bank to be cautious.

If Donald Trump implements planned tariffs on goods entering the U.S. next year, inflation could surge as businesses pass the higher costs on to consumers. In a worst-case scenario, the central bank would have to start raising interest rates again to keep inflation from getting out of control.

This would likely put new pressure on dividend stocks, including Enbridge.

Growth

Enbridge wrapped up its US$14 billion purchase of three American natural gas utilities in 2024. The company is also working on a $27 billion capital program. The new assets will boost revenue and cash flow in the next few years. This should support steady dividend increases.

Enbridge raised the dividend in each of the past 30 years. Investors who buy the stock at the current price can get a dividend yield of 6.4%.

The bottom line on ENB stock

Near-term volatility should be expected, and it wouldn't be a surprise to see a better entry point in the coming months. That being said, investors seeking high-yield passive income might want to start nibbling at this level and look to add on any further downside.