Opinions Stockchase Insights
EnbridgeENB.TOBUYFeb 08, 2023
Stockchase InsightsStock price when the opinion was issued
As of Sep 04, 2026. Market Open.
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Excellent, very-well-managed company. Great financial discipline. Nice dividend of 5.5%, tax-advantaged over bonds. Expected EBITDA growth is ~5%. Payout ratio ~65%, not much room for dividend increases (~2-3% a year). Highly capital-intensive, fair amount of debt. Cost of debt going up makes it hard for valuation to go higher.
More attractive are companies with dividends that may be lower, but growing rapidly.
Maintaining the dividend is not a challenge, and it will continue to grow. Under pressure because of the assumption that peace will come to the Strait of Hormuz. But the space ran up in the first place due to the conflict. Just look at the chart. Big capex program, growth in various businesses.
Blue-chip company, ballast for your portfolio. Buy, put it away for the dividend. His firm has owned for ~27 years, and they've been happy campers reaping the income.
Darren Sissons
Pays a 4.5% dividend that will grow. They have the largest crude oil pipeline network in North America. They own nat gas operations in the U.S. They have a backlog that can grow their cash flow by 5%. Will benefit from Ottawa's infrastructure growth in western Canada.
Christine PooleYield is a bit lower than some of the others. Results were largely in line, market reaction may just be due to whipsawing from Iran war. As well, not immediately proceeding with an expansion. Still a very good name, though he owns PPL for its size and growth.
Any of Canada's 4 major pipelines are good investments for the long term.
He doesn't own any of the pure-play oil producers right now (though he does own TOU). The reason is the volatility we're seeing.
His team plays energy these days by owning ENB, and some of the smaller midstream companies like PPL and GEI. He likes their stability.
Andrew PinkPipelines are not quite as good as utilities for safety, because they're perceived as being commodity-sensitive (even though they're really not). This name will give you a good dividend and safety. You'll get your dividend, and the safety means you can sleep at night (and that's worth something). You can get diversification via funds and ETFs.
Likes it, great business. Performing really well. Incredibly strong management. Only negative is that, in general, securities with higher dividends and lower growth are not leading this market.
Risk/reward is good. Energy sector is relatively early on in a longer-term bull phase. Some inflation protection. Yield is 5%.
David Burrows
Has been an income stock for her for many years. Is the biggest pipeline company in the world while their renewable business is growing. Wars are pushing governments to secure energy supplies. They serve 75% of refineries in the US Gulf Coast. Canada wants to build more energy infrastructure. Both are tailwinds. But we need to see higher production growth from energy products and Indigenous support for new pipelines. Pays a 5.3% dividend that keeps growing.
(Analysts’ price target is $76.85)Christine Poole
Due to the stability of the demands for their services and the strong barrier to entry in the utility industry, ENB revenue is really resilient across market cycles.
These advantages allow most utility companies to leverage their balance sheet. These are quite common practices in the industry. Interest rates moving up are a risk.
However, as of Q3-2022, the debt structure includes 90% fixed rates; the company is managing this risk quite well.
As ENB matures, growth in dividends also normalizes along with inflation rates, as their pricing adjustment is regulated by authorities.
Its reduced dividend growth guidance is likely part conservatism and part current conditions.
Although, we don’t expect ENB to grow and compound capital at a very high rate, going forward ENB is still attractive as a “bond proxy” for income investors.
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