Enbridge (TSX:ENB) Stock Price: Buy the Dip?
The Motley Fool
Published Dec 05, 2021 09:00
Updated Dec 05, 2021 09:15
Enbridge (TSX:ENB) Stock Price: Buy the Dip?
The stock market correction continues for much of the TSX, and that includes among energy stocks. Enbridge (TSX:TSX:ENB)(NYSE:ENB) has proven itself not immune to the powers of Mr. Market. After reaching 52-week highs of almost $54 per share, Enbridge stock came down with the rest of the market.
Energy drop There’s a reason it’s called a stock market correction. Enbridge stock came down with much of the TSX today as oil prices continue to surge upwards. Shares of Enbridge stock came down 13% after reaching 52-week highs to around $48 per share.
However, there has been a slight uptick recently, even as the stock market correction continues. This came after Enbridge stock announced a partnership with Capital Power for a new carbon-capture program. In the partnership, Enbridge stock would transport and storage the carbon provided by Capital Power. This would allow for carbon neutrality, while finding new uses for Enbridge’s pipelines.
These projects are already up and running for other pipeline companies, and it’s what will be needed in a clean energy future. A report recently stated that the world produced a record level of clean energy projects in 2021. As more projects come up with government support, that’s cash energy companies like Enbridge stock want a piece of.
Why you should care Clean energy is the future. And that means the future of your cash belongs in clean energy as well. Surging oil and gas prices, not to mention coal, make clean energy infrastructure look even more attractive — to consumers and to companies like Enbridge stock.
Investors would, in the short term, receive a double whammy. On the one hand, you continue to get access to its long-term contracts that lead to stable revenue. But on top of that, you get a surge of income from growth projects in the clean energy sector. Long term, you have revenue from two strong sources for decades to come.
A piece of the action Right now, there’s another bonus from buying up Enbridge stock at these prices. You get access to a 7.03% dividend yield. That’s something you simply don’t see on the TSX today. Furthermore, pipeline companies are likely to join the club when it comes to boosting their stagnant dividends. So, you could be looking at an 8% yield very soon.
If you buy on the dip, you’ll get a solid dividend and access to long-term growth — all for incredible value. Right now, Enbridge stock trades at 16.96 times earnings, and an EV/EBITDA of 12.54. That’s both in and around value territory. Furthermore, analysts give it a potential upside of 17% as of writing. And that’s just in the next year.
While the stock market correction can be a drag on the TSX today, see it as an opportunity or even as an early gift for the holiday season. You get access to a strong, long-term hold that delivers cash almost immediately. A $20,000 investment in Enbridge stock today would give you $1,421 in dividends annually as of writing.
Get The App
The post Enbridge (TSX:ENB) Stock Price: Buy the Dip? appeared first on The Motley Fool Canada.
Fool contributor Amy Legate-Wolfe owns shares of ENBRIDGE INC. The Motley Fool recommends Enbridge.
This Article Was First Published on The Motley Fool
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.