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Prior to getting started, I’d just like to drop this 5 year performance chart from 3 popular pipelines here in Canada. 2021 TFSA Contribution Room: What to Buy With $75,500, Passive-Income Investors: Canadian Banks Are Just Getting Started, 3 Top Canadian Stocks Now Selling at 52-Week Highs, 3 Undervalued TSX Stocks That Can Deliver Superior Returns in 2021, Millennials: How to Save and Invest for Your 1st Home Faster. A dividend cut will come and the stock will tank. The Motley Fool owns shares of and recommends Enbridge. Payout Ratios Free Webinar: https://bit.ly/3deW1eo Best Renewable Energy Video: https://youtu.be/YKfpGrx6kdo How can Enbridge sustain its dividend payment? Enbridge was also telling investors to expect solid long-term growth before COVID-19 threw markets for a loop. TFSA Investors: 3 Safe Dividend Payers Yielding up to 6.3% This outstanding company has all sorts of things going for it. Yes. The most versatile and in-depth investment platform in Canada is just a click of a button away, Disclaimer: The writer of this article may have positions in the securities mentioned in this article. The company has paid a lucrative dividend for a long time. However, the ability to grab market-beating returns strictly from the dividend with one of Canada’s largest companies and longest consecutive dividend growers is no doubt appealing. While that payout ratio looks concerning, it’s not necessarily indicative of the company’s ability to continue paying its dividend. Junior producers and even some major producers inÂ Suncor’s (TSE:SU) case were slashing dividends at rates we have never witnessed before. The midstream industry is one that enjoys numerous competitive advantages for several reasons. Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Around $40/share, this business keeps doing incrementally better. © 2020 The Motley Fool Canada, ULC. It has a network of crude oil and natural gas pipelines across Canada — assets that can’t be easily replicated today. The company also has a number of projects in its developmental pipeline, including multiple offshore wind farms that have the potential to generate 1 gigawatt in gross power capacity. At the time of writing, COVID-19 has wreaked havoc on Enbridge’s share price. A similar situation is playing out in the United States. Enbridge (TSX:ENB)(NYSE:ENB) is paying a dividend yield of around 8%, but investors shouldn't expect it to last. This is not a low risk investment, and if you’re an investor with a quick trigger finger in terms of selling, this may not be for you. Returns since inception, October 2013. Check out Stockrover Here! Reviewing Enbridge's Dividend Safety After Major Project Delay. Its current dividend is $3.24 per share. Not to alarm you, but you’re about to miss an important event. At the time of writing, Enbridge stock trades at $36.25 per share and provides a dividend yield of 9%. I’ve can’t count the amount of times I’ve come to Enbridge’s defense when somebody accuses the dividend of being on the brink of being cut. It is important to seek out a qualified investment, tax or legal professional before making any decisions related to your own personal investments. Considering we are in the midst of a global pandemic that has wreaked havoc on oil prices, this is a strong sign. As specialists in … Yes. Enbridge is one of the best ultra-high Super SWAN stocks you can buy today. DISCLAIMER:Stocktrades is an independent media portal covering the development related to stocks on the TSX. Enbridge (TSX:ENB)(NYSE:EMB) has long been one of Canada’s most popular dividend stocks, and it’s easy to see why. The company often locks up producers in long-term take or pay contracts, which makes Enbridge’s cash flows and the dividend more reliable. Currently, Enbridge offers a high forward yield of 8.1%. At least for the pipeline operators. An analysis of Enbridge’s dividend must go a little deeper than just the numbers. There’s just one problem. The company delivers more than 3 million barrels of crude oil every single day, equating to about 25% of the crude oil produced in North America. But now that we continue to move forward through the COVID-19 pandemic, the oil and gas industry (which was already in a bear market prior to the pandemic) is getting hit even harder. Shares are currently trading around the $32 level, which is a far cry from the $40 level we saw at the start of the year. These are some of the best growth streaks and dividend growth rates in the country. Like the pipeline business, this part of the company delivers steady earnings and is protected from competition. The company has pipeline systems that serve both oil sands distribution and natural gas. They see a high payout ratio and assume the dividend is close to being cut. Save time by adding this page to your list of favorites. The oil and gas industry is expected to struggle, and although we’re seeing Enbridge trade at valuations we haven’t witnessed in some time, we’re also seeing the company post historically low numbers in terms of return on equity and net margins on a trailing 12 month basis. Click to remove it from your list. The payout should be safe, given the DCF outlook and the decent growth portfolio. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you. It’s North America’s largest gas utility by volume. Enbridge common shares have a Compound Annual Growth Rate (CAGR) of more than 11% over a 25-year period. COVID-19 happened, and it is impacting the entire energy sector in a big way. I doubt it. Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So right now Enbridge’s dividend looks safe and secure. He has become an authority figure in the Canadian finance niche, primarily due to his attention to detail and overall dedication to achieving the highest returns on his investments. The company is currently paying out 90% of free cash flows and 65% of operating cash flows towards the dividend. It has raised its dividend, even as oil producers slashed and eliminated theirs. appeared first on The Motley Fool Canada. Enbridge's (ENB) shares have been suffering of late due to the perceived weakness of the dividend. On your next visit, you'll find a shortcut to this page in the main menu . In an industry plagued with misinformation, our main priority is to maintain complete objectivity and bring investors around the world accurate, timely and high quality investment news and information. It expects these investments to boost cash flow growth through 2020. There’s no questioning that Enbridge’s stock price is currently in the dirt. More reading. This year will have a lot of unknowns. An investment in Enbridge for its dividend is going to require one to be willing to withstand the inevitable volatility the oil and gas sector is going to bring for the foreseeable future. The mass panic and ultimate selloff of many companies in the oil and gas sector left Canadians who were paying attention with some bargains, Enbridge being one of them. Motley Fool Returns Stock Advisor S&P 500 Overall, the company has actually increased its distributable cash flows year-over-year and the company expects to generate $5.143 billion in DCF in 2020, an increase when compared to 2019. I suspect they are doing this so Investors won’t jump ship but this is not sustainable right? Enbridge is an energy generation, distribution, and transportation company that has operations in both the United States and Canada. 7 Small-Cap Canadian Stocks To Buy In 2020, The 5 Best Canadian Bank Stocks to Buy Now. The fact they hold positions in securities has had no impact on the production of this article. Currently, Enbridge pays investors a dividend of $0.738 every quarter, which totals $2.952 for a full year, which is well in excess of its profits and results in a payout ratio of about 120%. All rights reserved. New projects and price increases will help drive earnings growth, too. Enbridge (TSE:ENB) is one of the more popular options when it comes to Canadian dividend stocks. As you know, the lower a stock’s price goes, the higher the yield is if the dividend rate stays the same. There’s two ways to look at this. This is more than triple the S&P 500’s average of ~1.9%, which seems to make it a good option for those seeking a high yield stock for income. Overall, Enbridge’s dividend should be safe. Stocktrades offers strictly investment opinions, not investment advice. Do I think investors looking solely at the company’s payout ratio in terms of earnings are making a mistake? Nowadays, it’s rare to find a big distribution yield and a high degree of safety. Do I think investors looking solely at the company’s payout ratio in terms of earnings are making a mistake? More. For 2020, it expects DCF to fall within a range of $4.50 and $4.80.
And of course, auxiliary divisions like power generation and electric transmission lines reported barely a blip in business activity. I’m a shareholder myself, and I’m not spending much time worrying about Enbridge’s dividend. But it's true the energy world is changing given ESG. Microsoft says it found malicious software in its systems . All Instrument Types; Indices; Equities; ETFs; Funds; Commodities; Currencies; Crypto; Bonds; Certificates; No results matched your search. It has also paid consistent dividends since the 1940s. Nothing is for certain anymore, but I expect Enbridge to continue to sustain and raise its dividend – even during a difficult 2020. Dividend Safety Rating: A Despite the challenges, Enbridge reaffirmed its DCF outlook and expects to generate DCF per share of $4.50 to $4.80 in 2020, which implies its payouts are … However with it being an industry leader and sporting a huge dividend yield, I’m not surprised investors are willing to pay a premium for the company right now. This is a significant discount to what it typically has traded at over the last 5 years (20.4) and the company is also trading at a price to book valuation of 1.3, levels at which we’ve never seen a blue-chip stock like Enbridge trade at. Enbridge is currently trading at 15.3 times forward earnings. A safe 8% dividend yield Importantly, Enbridge stock’s attractive valuation also results in an incredible dividend yield of 8.1%. Finally, investors should also note that Enbridge's stock price is correlated to oil prices, even if its cash flow is not. It wasn’t that long ago that major producers like Suncor and Canadian Natural Resources were urging the government to make sweeping changes to the operations of Enbridge’s mainline network, citing it as essentially unfair. Enbridge is often touted as a monopoly in the pipeline sector, amassing over 27,564 kilometers of active crude pipelines across North America. One piece of good news for investors who might be worrying about Enbridge’s dividend is the stability of its natural gas utility and power generation businesses. This oil still has to be transported to its final destination. We’ll get to valuation shortly, but I wanted to highlight that as it is a primary factor for the company sporting a 8.39% dividend yield, which most would deem unsustainable. But volatile energy prices have kept investors on the sidelines.The post Enbridge Stock Is Yielding 8%, But Is it Safe to Buy? Yes. Let’s take a closer look at this payout to see if it’s sustainable. If there’s one thing I’ve come to learn, especially in 2020, it’s to expect the unexpected. In fact, the company recently announced in June 2020 that it would be moving forward with its Fecamp project, which is expected to add 500 megawatts of capacity and a 20 year fixed-price contract. Yes. That comes out to $2.26 in U.S. dollars and equals an impressive 8.8% yield. While its dividend is appealing today and the company is still producing strong results today, I wouldn’t rely on its dividend for the long term given all the uncertainty that exists today, especially considering the size of the payments that Enbridge is making. Enbridge has increased its annual dividend each year since 1995. Buy during the strong ESG trend Has long owned this, a great Canadian compounder, but the stock has gotten expensive. I understand I can unsubscribe from these updates at any time. For most investors this would be cause for concern, however it’s important for a company like Enbridge that we look at both the free and operating cash flow payout ratios. That should be an encouraging sign. I’d argue in the short term, such a scenario doesn’t matter so much. However, further setbacks could slow the company's short-term growth prospects. But with that said, Enbridge’s dividend safety has weakened over the years, especially since the Spectra merger. There’s some solid reasoning for this as well. This outstanding company has all sorts of things going for it. We believe, though, that dividend viability fears are over-exaggerated. Enbridge Inc (ENB) will begin trading ex-dividend on August 13, 2020. About Us:Stocktrades.ca was founded in 2016 by investors Daniel Kent and Dylan Callaghan, with the ultimate goal of providing Canadian investors with the best possible tools to increase their investment portfolios. Enbridge’s payout ratio is 124% !!! Please read the Privacy Statement and Terms of Service for more information. Despite these subsidiaries offering investors a lot of positives, many investors are worried. Can Enbridge grow the business and the dividend? All content on Stocktrades is the views of the individual reporters. They think Enbridge’s dividend may be at risk. Enbridge: Dividend Is Safe. Simply click here to discover how you can take advantage of this. Enbridge (TSE:ENB) Dividend & Stock Analysis – Is It Safe? Currently, the company is the fifth largest stock by market capitalization in the country, and the fourth highest in terms of companies that currently pay a dividend. Hier erhalten Sie eine Übersicht über die Dividendenzahlung und Dividendenrendite von ENBRIDGE sowie die anstehenden und vergangenen Hauptversammlungstermine (HV-Termine). Now, don’t get me wrong, there are reasons for undervaluation. Enbridge stock is one that's high on the list of any dividend investor looking for passive income. Last year, Enbridge’s capital spending was about $14 billion. Enbridge’s forward dividend is now $3.24 CAD ($2.43 USD) giving a dividend yield of about 6.0%. The dividend is safe when you consider ENB distributable cash flow. A safe healthy company that can keep raising dividends for years has a payout ratio of 75% or less. Or is Enbridge’s dividend on its way to inevitable cut as well? Imagine how hard it’ll be if Donald Trump gets defeated in November. It’s nearly impossible to build new pipelines, especially mega projects that cross provincial lines. That marks 25 consecutive years of dividend increases — a feat that immediately vaults Enbridge into the elite dividend-growth stocks in Canada. Don’t worry; this 7.7% yield isn’t going anywhere. Investors are worrying about all the extra inventory out there. In 2019, Enbridge earned $4.57 per share in distributable income. Fool contributor Nelson Smith owns shares of ENBRIDGE INC. First, it’s highly capital intensive, with major projects often costing billions of dollars to complete. But Enbridge believes the dividend is safe and projects that its distributable cash flow (DCF) will continue to grow at a rate between 5% and 7% over the long term. Let’s take a closer look at this payout to see if it’s sustainable. Enbridge stock is offering one of the best dividend yields these days. Payout ratio calculation and chart. And in 2021, that range is expected to be even higher, between $4.70 and $5.00. Quotes. Furthermore, if you’re not willing to accept the fact that although unlikely, a dividend cut would inevitably cause significant losses in capital due to the share price dropping, Enbridge is probably not for you. Market Cap: $78.16 billion Forward P/E: 14.48 Yield: 8.39% Dividend Growth Streak: 24 years Payout Ratio (Earnings): 126.56% Payout Ratio (Free Cash Flows):Â 89.28% Payout Ratio (Operating Cash Flows): 65.92% 1 Yr Div Growth Rate: 9.99% 5 Yr Div Growth Rate: Premium Members Only Stocktrades Growth Score: Premium Members Only Stocktrades Dividend Safety Score:Â Premium Members Only. For example, pipeline project… Canadaâs Top 10 Dividend Stocks for 2021 and Beyond, Canadian Dividend All-Stars â Week of Dec 14, Canadian Oil Stocks â the Best Oil & Pipeline Stocks Today, Canadaâs Best Monthly Dividend Stocks and REITs, PO Box 16018 Lower Mount Royal, Calgary, Alberta, T2T5H7, Canada. Search website for: Popular News. ISSN : 2393-073X; firstname.lastname@example.org; Home; About Us; Call For Paper; Paper Submission; Editorial Board; Issue. Charts provided by StockRover. On a whole, Enbridge is one of the more expensive pipeline companies in the country. Published Tue, 19 Jun 2018 03:47:12 -0400 on Seeking Alpha. This means that large players like Enbridge, with vast access to low-cost capital, have a major advantage over smaller rivals. Remember, Enbridge has been dealing with a weak energy market for years now, and it has been weathering that storm just fine. Dan is primarily a researcher and writer here at Stocktrades.ca, and his pieces have numerous mentions on the Globe and Mail, Forbes, Winnipeg Free Press, and other high authority financial websites. March 22, 2019. Passive Income: 3 Stocks That Have Raised Dividends for Over 25 Years. ENB is also 50% in distributing natural gas, and has business in hydrogen gas; ENG will be a key player here. Hard to walk away from this. Because of meaningful non … Do I think Enbridge’s dividend is safe, and well covered by cash flows? This article was coproduced with Dividend Sensei and edited by Brad Thomas. Although we do appreciate Enbridge’s growth, as it does allow them to increase cash flows and keep raising the dividend, we understand that this is a company that has more or less hit a plateau, and we don’t expect a crazy amount of share appreciation. But does that make it a guarantee the company maintains its dividend? At about 50% of total earnings they’re not enough to cover the dividend alone, but they still offer peace of mind for investors who worry about the oil market. These earnings should be stable no matter what happens to the underlying energy market. Enbridge (NYSE:EMB) has long been one of Canada’s most popular dividend stocks, and it’s easy to see why. The other moat creating advantage is the highly regulated nature of the business. Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada. If we look at Enbridge’s chart in terms of historical dividend yield, we can clearly see where Enbridge’s stock price took a dive. For dividend investors seeking out a high-yield in the out-of-favor energy space, Enbridge looks like a pretty good option today. That bodes well for the company’s existing infrastructure. This also bodes well for the company’s dividend, which I think is safe. Despite a Republican president in the White House, large pipeline projects are still being held up by protesters and the legal system. Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group. Yes, pipelines do have less reliance on the price of oil when compared to say a producer, however these companies still can’t survive in low commodity environments for long. For every dollar they take in they pay out 1.24$. We previously reviewed these issues and do not expect them to affect Enbridge's dividend safety profile, even if Line 3 were to be scrapped. Can Shopify (TSE:SHOP) Keep up Itâs Torrent Growth Rate? Current as of December 18, 2020. The Enbridge stock is a must-buy for investors seeking a growing income stream. The payout is solid and can easily survive a few months of uncertainty. Some companies like Pembina Pipe and TC Energy can be had, from strictly a valuation standpoint, for less than Enbridge. That’s also great news for companies like Enbridge that own a lot of assets in the U.S. And then there’s Enbridge’s gas utility business, which provides natural gas for some 3.8 million customers in Ontario and Quebec. As you’ll see, Enbridge is one of the worst performing of the bunch, and is one of the primary reasons that although I own both Enbridge and TC Energy, my largest holding is TC. But the fact remains, Enbridge has raised dividends for 2.5 decades and has grown its dividend at a 16% clip annually over the last 5 years. The global shutdowns and lower consumer spending has decimated oil demand which has forced companies including Enbridge to postpone and reduce capital expenditure for 2020. Canada Revenue Agency: Do You Need to Repay CERB Money? … It projected distributable cash flow of between $4.50 and $4.80 per share for 2020. 2020 might see a pause on these initiatives, but they’re both viable strategies for the long term. After a busy 2018 in which Enbridge (ENB) rolled up its MLPs to simplify its corporate structure, management delivered some bad news on March 1, 2019, announcing a one-year delay on the firm's $6.8 billion Line 3 …
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