Enbridge Stock: One of the best Dividend Stock Canada Has to Offer

Company Summary Enbridge Inc. ("Enbridge" or "the Company") is a leading energy infrastructure company in North America with about 17,000 employees that are mainly concentrated in Canada and the United States (U.S). The company primarily operates through five (5) segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution & Storage, Renewable Power Generation, and Energy Services and each of these segments contribute 26.2%, 12.3%, 11.5%, 1.5% and 48.5%, respectively to total revenues. Under its key business - Energy Services, the company transports energy through the most extensive and advanced crude and liquids pipeline system that spreads across 17,127 miles globally. The company transports 3 million barrels of crude every day which accounts for almost 63% of the Canadian crude oil production that are transported to the U.S. Enbridge generates stable fee-based revenues from its diversified network of midstream assets.  The following fundamentals and factors have been evaluated and summarized to make an investment recommendation regarding Enbridge: Earnings Per Share (EPS) Information Current Quarter (Q1, 2021) EPS Estimate 0.55 Current Year (2021) EPS Estimate 2.05 EPS growth in 2020 vs Previous Year  -6.52% EPS growth in Q4 2020 vs Previous Quarter 19.44% Estimated Long-Term EPS Growth Rate 6.00% Dividend Information Dividend Yield 6.73% Annual Dividend $2.61 Payout Ratio 1.35 YoY Change in Payout Ratio 0.27 Last Dividend Payout / Amount 11/02/2021 / $0.65 Price to Earning Ratio (P/E ratio) P/E 18.96 Trailing 12 months 21.30 Financial Summary (in millions of CAD) TTM 12/31/2020 12/31/2019 12/31/2018 Revenue 37,087 37,087 50,069 46,378 Operating Profit 7,957 7,957 8,683 6,939 EBIT 7,034 7,034 10,265 6,404 Total Assets - 160,276 163,269 166,905 Total Liabilities - 95,913 93,862 93,470 Total Equity - 64,363 69,407 73,435 End Cash Position 490 490 676 637 Key Financial Ratios as at 2020 FY Gross Margin 36.75% Operating Margin 19.38% Net Margin 8.65% Return on Assets 2.08 Return on Equity 5.28 Return of Total Capital 5.64 Return on Invested Capital 2.68 Interest Coverage 2.73 Total Debt to Equity 110.25 Source: 2020 Enbridge Financials/ Utradea Analyst Estimates Comments and Recommendation Despite the fact that oil prices declined by a significant margin in 2020, Enbridge managed to generate a steady stream of cash flows regardless of the prevailing macroeconomic uncertainty - thus showcasing the resiliency of its business model and making it a top buy (especially for value and contrarian investors). The company's stock has an attractive forward yield of over 6%. It has increased dividend payouts for 26 consecutive years including a 10% hike in 2020 and a 3% hike in 2021. Tracking the enbridge stock in line with input from other analysts reveals a 12-month average target price of $52 which is 11% above the current trading price as at the time of writng this report. After accounting for its attractive dividend yield, annual returns will be closer to 17%. Through 2023, the Company's management estimates that the Enbridge stock will grow its distributable cash flow per share by 5-7% per year. This should lead to healthy dividend increases of approximately 3-5% in the period. Therefore, ignoring any potential valuation expansion, Enbridge can deliver annualized returns of 10-12% through 2023 and these returns will primarily come from its compelling dividend yield of 7%.

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Temitope

May 4, 2021

5.61%

Change % Since Posting

47.98

Price When Posted

2.69

Change Since Posting

ENB.TO

Enbridge Inc.

50.67

-0.04
-0.08%
Current Price

Enbridge Stock: One of the best Dividend Stock Canada Has to Offer

bullish

Company Summary

Enbridge Inc. ("Enbridge" or "the Company") is a leading energy infrastructure company in North America with about 17,000 employees that are mainly concentrated in Canada and the United States (U.S). The company primarily operates through five (5) segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution & Storage, Renewable Power Generation, and Energy Services and each of these segments contribute 26.2%, 12.3%, 11.5%, 1.5% and 48.5%, respectively to total revenues.

Under its key business - Energy Services, the company transports energy through the most extensive and advanced crude and liquids pipeline system that spreads across 17,127 miles globally. The company transports 3 million barrels of crude every day which accounts for almost 63% of the Canadian crude oil production that are transported to the U.S. Enbridge generates stable fee-based revenues from its diversified network of midstream assets. 

The following fundamentals and factors have been evaluated and summarized to make an investment recommendation regarding Enbridge:

Earnings Per Share (EPS) Information

Current Quarter (Q1, 2021) EPS Estimate 0.55
Current Year (2021) EPS Estimate 2.05
EPS growth in 2020 vs Previous Year  -6.52%
EPS growth in Q4 2020 vs Previous Quarter 19.44%
Estimated Long-Term EPS Growth Rate 6.00%

Dividend Information

Dividend Yield 6.73%
Annual Dividend $2.61
Payout Ratio 1.35
YoY Change in Payout Ratio 0.27
Last Dividend Payout / Amount 11/02/2021 / $0.65

Price to Earning Ratio (P/E ratio)

P/E 18.96
Trailing 12 months 21.30

Financial Summary (in millions of CAD)

  TTM 12/31/2020 12/31/2019 12/31/2018
Revenue 37,087 37,087 50,069 46,378
Operating Profit 7,957 7,957 8,683 6,939
EBIT 7,034 7,034 10,265 6,404
Total Assets - 160,276 163,269 166,905
Total Liabilities - 95,913 93,862 93,470
Total Equity - 64,363 69,407 73,435
End Cash Position 490 490 676 637

Key Financial Ratios as at 2020 FY

Gross Margin 36.75%
Operating Margin 19.38%
Net Margin 8.65%
Return on Assets 2.08
Return on Equity 5.28
Return of Total Capital 5.64
Return on Invested Capital 2.68
Interest Coverage 2.73
Total Debt to Equity 110.25

Source: 2020 Enbridge Financials/ Utradea Analyst Estimates

Comments and Recommendation

Despite the fact that oil prices declined by a significant margin in 2020, Enbridge managed to generate a steady stream of cash flows regardless of the prevailing macroeconomic uncertainty - thus showcasing the resiliency of its business model and making it a top buy (especially for value and contrarian investors). The company's stock has an attractive forward yield of over 6%. It has increased dividend payouts for 26 consecutive years including a 10% hike in 2020 and a 3% hike in 2021. Tracking the enbridge stock in line with input from other analysts reveals a 12-month average target price of $52 which is 11% above the current trading price as at the time of writng this report. After accounting for its attractive dividend yield, annual returns will be closer to 17%.

Through 2023, the Company's management estimates that the Enbridge stock will grow its distributable cash flow per share by 5-7% per year. This should lead to healthy dividend increases of approximately 3-5% in the period. Therefore, ignoring any potential valuation expansion, Enbridge can deliver annualized returns of 10-12% through 2023 and these returns will primarily come from its compelling dividend yield of 7%.

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52.36

Target Price

10/ 10

Confidence

1-3 Years

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