February 24th, 2011 | 
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After looking at the top 6 Canadian banks, it’s time to look at some energy companies. My first dividend analysis is of Enbridge. It transports and distribute energy in North America through its vast network of pipelines. It’s one of the largest Canadian energy distributor publicly traded. If it generates energy, Enbridge is usually involved. They operate in the current fields:
- Gas distribution with 1.9 million customers
- Oil & Gas transport through its pipelines
- Storage of oil & gas
- Renewable energy
- Alternative energy
Quick Facts
- Stock Ticker: ENB on both NYSE & TSX
- Market Cap.: 22.04B$
- P/E: 22.31
- EPS: $2.57
- 5 Year EPS Growth Average: 16.37%
- Dividend Yield: 3.41%
- 5 Year Dividend Growth Average: 13.88%
- ROE: 13.14%
- 52-Week Low: $46.03
- 52-Week High: $59.03
- 52-Week Range: 87.46%
Enbridge had a nice growth this past year. If you combine that with its dividends, it makes for a nice investment.
Dividend Growth
How do you like this chart? 13 increases in the past 13 years and an annual average dividend growth of 11% for those 13 years. Unfortunately, it was flat for 10 years prior to that and a little inconsistent with its growth before that. It has, however, paid dividends for 58 years with no drop in dividends. It highlights their commitment to pay dividends.
Dividend Payout Ratio
Enbridge targets a 60%-70% payout ratio. In the past 10 years, it has done quite well to keep their payout in line with their targets.
EPS Growth
The EPS growth is actually nice. Even though it suffered a drop this past year, you can still see a linear growth. ENB has a P/E of 22 which is a little above the sector average of 20 but not too far from the pack.
Thoughts
Enbridge is a Canadian Dividend Aristocrats and investor friendly with its healthy dividends. Its business model is recession proof but not incident proof unfortunately. There is always a risk that an incident can cost them money and that translates in a step back for investors. The stability of the business and the healthy dividends make Enbridge a solid ‘boring’ investment.
Readers: Do you feel Enbridge has a place in your portfolio?
Full Disclosure: At the time of writing I am long ENB.
Disclaimer: The material presented should not be considered a recommendation. You should always do your own research and reach your own conclusion.
I bought ENB last March so I have enjoyed the gains this past year. Because I believe it’s trading on the high side I won’t be adding to my position anytime soon.
What do you think of the board’s recommendation to do a 2 for 1 stock split?
Echo recently posted..Cost To Stage An Outdoor Hockey Game
I think it’s welcomed at their current price. It’s more attractive to all types of investors and it breaks a psychological barrier.
It also makes it easier to DRIP. If you take a stock at 50$ today and splitting at 25$ and paying the same dividend percentage, you need less invested capital to DRIP 1 share at 25$ than you do at 50$. However, I DRIP it under CIBC Mellon so I get fractional shares and that’s not as relevant for me.
Yes @echo I think Enbridge is too high priced to get into now, much too close to the 52-week high for my liking. It also has a high liability-to-equity ratio, and I think is overvalued. But definitely if you bought a year ago or before that, its been a nice ride
I was watching ENB for couple of months , but added to my position CPG and DAY (much higher dividends) and PBN (much cheaper)
Good post.
As you might already know, I love ENB, but I think most dividend investors are big fans of this one too. And why not? They provide what everyone needs, heat in the winter and BBQ in the summer. What’s not to love?
Everytime I fire up the BBQ in the summer, I think of these guys. C’mon, spring!
@Echo and others, I like the move for the 2-fo-1 stock split:
http://www.marketwire.com/press-release/Enbridge-Board-Recommends-2-for-1-Stock-Split-TSX-ENB-1399457.htm
Cheers,
Mark
My Own Advisor recently posted..I Just Bought Another Dull and Boring Stock
I like Enbridge and would love to get my hands on some but not at this price. There will be opportunities for sure…
BeatingTheIndex recently posted..Investing in Oil- My Bias for Canadian Oil Producers
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I agree the ENB is a bit too expensive right now. Recently I’ve been hesitant at getting into stocks with high P/E’s unless they are stellar.
youngandthrifty recently posted..Weekend Ramblings and PF Blog Love- H&R Block Tax Software Giveaway Edition
@youngandthrifty
ENB’s PE is somewhat in line with its peers though. I recommend you look at the industry to see where the PE falls compared to the other competitors. None of them are below 18. I started to use GlobeInvestors for competitors. Google Finance is not too obvious.
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[...] at the stocks I reviewed in the past months and only one matches the 10/10 criteria: Enbridge (ENB). Power Corp (POW), Power Financial (PWF) and Great-West LifeCo (GWO) each had 8 years of [...]
Great job! Some weeks ago, I purchased shares of Enbridge inside my son’s RESP. In my view, it’s a great company to own in the Pipelines sector. In my view, you can’t go wrong with Enbridge in the long-run.