Enbridge: Why You Should Own This TSX Heavyweight Stock
The Motley Fool
Published Apr 22, 2021 19:00
Updated Apr 22, 2021 19:15
Enbridge: Why You Should Own This TSX Heavyweight Stock
In May 2020, I’d explained why Enbridge (TSX:ENB)(NYSE:ENB) stock was a steal, as the COVID-19 pandemic started to rage across North America. Shares of Enbridge have climbed 14% in 2021 as of mid-morning trading on April 22. This has accounted for just about all its gains year over year. Today, I want to discuss why investors should buy and hold Enbridge for the long haul.
A resurgent global economy is good news for oil and gas prices Oil and gas prices were hit hard in 2020. The COVID-19 pandemic was a huge disruption for the oil and gas space. Demand plummeted as tens of millions of workers around the world were forced to work from home for months on end. The reduction in daily commutes meant that gas retailers would take a hit, which led to a dip in prices.
The global economy has bounced back nicely in 2021. Many countries, including Canada, are still in the early stages of inoculating their citizens. Regardless, the International Monetary Fund (IMF) is projecting 6% global growth in 2021. This is a good sign for the oil and gas industry. Goldman Sachs (NYSE:GS) is projecting a huge spike in oil and gas demand in the summer. Enbridge is the largest energy infrastructure company in North America. It is well worth your attention in this climate.
Enbridge performed well over the past year Enbridge unveiled its final batch of 2020 results on February 2020. It was a challenging year for Canada’s energy sector, but this infrastructure giant managed to come out of it looking good. Adjusted EBITDA came in at $3.3 billion — flat from the prior year. Meanwhile, distributable cash flow (DCF) rose to $9.4 billion over $9.2 billion in 2019.
Utilization rates in gas transmission, gas distribution, and the company’s renewable power business was high throughout 2020. This added some much-needed predictability in a tough year. The company has continued to wrestle with regulators in the United States. Most recently, it was pushed into a legal battle in Michigan after Governor Gretchen Whitmer ordered the shut down of the Line 5 project. Enbridge has pushed back, opting to take the battle to the courts.
This TSX heavyweight offers solid value and great dividends In Q4 2020, Enbridge hiked its quarterly dividend by 3% to $0.835 per share. The company has achieved 26 consecutive years of dividend growth. Enbridge stock last had a price-to-earnings ratio of 31. That puts this dividend heavyweight in favourable value territory compared to its industry peers.
Investors who snatch up Enbridge get to own a company that still boasts a massive project pipeline. It is on track for solid DCF growth going into 2023. This should also underpin its dividend growth in the first half of this decade. On that front, Enbridge offers an attractive 7.1% yield. It remains one of the strongest options for investors on the hunt for exposure to the energy space and for a top dividend stock.
Get The App
The post Enbridge: Why You Should Own This TSX Heavyweight Stock appeared first on The Motley Fool Canada.
Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2021
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.