It's natural that income investors would be attracted to stocks with exceptionally high dividend yields. The higher the yield, the more income they'll receive, assuming the businesses are reliable cash generators.
Enbridge Inc. boasts a $100 billion market cap, a 6% dividend yield, and a robust asset portfolio, positioning ENB stock for future growth. The company's mainline pipeline is crucial, with a forecast of 3 million barrels/day and expansion plans in the Permian Basin and Gulf Coast. Despite strong EBITDA growth, Enbridge's reliance on debt for funding raises concerns about its financial stability and potential dividend cuts.
Midstream companies are vital to the energy sector. They gather, process, transport, store, and export crude oil, natural gas, and related products.
Enbridge Inc.'s Q3 financials reflected some headwinds, which are all temporary in my view. Long-term growth is intact, thanks to rising electricity demand from AI and digital applications, ENB's strategic position, and aggressive capital expansion projects. The near-term issues caused price corrections and pushed up Enbridge's yield to be well above its long-term average.
Enbridge has demonstrated strong performance with record Q3 EBITDA, and strategic acquisitions, reinforcing its growth potential. ENB's diversified portfolio in crude oil, natural gas, utilities, and renewables, coupled with a 6.3% dividend yield, makes it attractive for income-focused investors. Management's guidance for 7-9% annual EBITDA growth through 2026, supported by a $27 billion project backlog, highlights robust future growth prospects.
The S&P 500 index (^GSPC -0.00%) is yielding a scant 1.2%. By comparison, the 6.3% yield on offer from Enbridge (ENB -0.33%) and the 6.4% from Enterprise Products Partners (EPD -0.62%) are huge!
When Wall Street gets its teeth into a story, it can lead to strange outcomes. For example, Kinder Morgan (KMI -0.07%) has seen a material price advance and now yields a relatively tiny 4.1%.
Enbridge's strong fundamentals drive premium valuations with high growth expectations, but there remains some uncertainty.
Warren Buffett has a famous quote: only buy something that you'd be perfectly happy to hold if the market shut down for 10 years. In my view, from time to time, it is worth asking this question to ourselves before pushing the buy button on specific securities. I present my investment decision criteria and two picks that I would be happy owning without having access to the public market for at least a decade.
President-elect Trump's 25% tariffs on Canadian imports could severely impact Canadian midstream companies like Enbridge and South Bow, though markets remain skeptical. Enbridge and South Bow's long-term contracts provide some mitigation, but increased energy costs could undermine their business models and result in lower valuations and dividend payments. The US and Canadian energy systems' deep integration makes tariffs impractical, potentially leading to higher costs and economic disruption in the US.
Enbridge (ENB -1.78%) is as consistent as they come. The Canadian energy infrastructure giant has paid dividends for nearly 70 years.
Enbridge has a vast midstream network, transporting 30% of North America's crude oil and 20% of U.S. natural gas, along with a 6.15% dividend yield. Despite strong revenue and net income growth, Enbridge's operating cash flow has stagnated, raising concerns about its actual growth pace. The company has a number of growth projects under construction, with a C$27 billion project pipeline at the moment.