Now Is Definitely the Time to Buy Enbridge Inc. Stock on the Dip!

Following a tough couple of months, it looks like now is finally the time to make your move on Enbridge Inc. (TSX:ENB)(NYSE:ENB). Find out why.

| More on:
time is money compounding

First there was the risk that buying shares in Enbridge Inc. (TSX:ENB)(NYSE:ENB) would have you falling into the “value trap.” Then there were the dangers of trying to catch a falling knife.

But finally, are we not at the point where now is the perfect opportunity to buy Enbridge shares on the dip?

Understanding the new landscape for Enbridge

Last year, Enbridge completed the $37 billion acquisition of its Houston-based peer Spectra Energy in a move that would create the largest energy infrastructure company in North America.

The transformative move effectively goes a long way to diversifying Enbridge’s operations from being focused on crude liquids to now involving more of a balance that includes Spectra’s dry natural gas assets.

But $37 billion is a hefty price tag, even for a company as large as Enbridge with a market capitalization approaching $88 billion.

What that means is that Enbridge, which has long been known — and heralded — for a steady stream of dividend increases may soon adopt a different profile in the investment community.

The company has managed to increase its payout by 9.7% on average over the past 10 years, which is certainly no small task.

But even with the company’s largest project ever — the Line 3 Replacement — coming online in the next few years, investors shouldn’t expect the pace of former divided hikes to continue.

That doesn’t mean Enbridge still isn’t a good — or even great — investment

It just means the company is going through a transition from being a growth company to more of a traditional pipeline utility, like, for example, Pembina Pipeline Corp.

But let’s not forget that even with the likelihood of slower growth standing ahead of the company, those shares are yielding a very attractive 6.2% today. That’s the best dividend yield that has been on offer for Enbridge in more than 10 years!

It’s obvious that the market has by now fully adjusted to the “new Enbridge,” and now is your time to strike while the iron is hot.

Shares hit a new 52-week low just last week but rebounded strongly heading into the weekend, up 3.7% in Thursday’s trading.

Enbridge shares traded as high as $50 on the Toronto Stock Exchange as recently as early January.

Even if shares just recovered back to those levels, it would mean a very nice 25% return in your investment account, not to mention that 6.2% dividend paying you while you wait.

Bottom line

“Patience is a virtue” is an old adage, but it’s also very applicable to investing.

If you’d managed to hold off on buying Enbridge long enough to get to this point, good on you, but you might want to start thinking about making your move now.

This could just be the “once-in-a-generation” opportunity for you to get in on this Canadian blue chip.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jason Phillips owns the Enbridge January 2019 25-strike calls. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Close up of an egg in a nest of twigs on grass with RRSP written on it symbolizing a RRSP contribution.
Dividend Stocks

3 Evergreen RRSP Stocks Every Canadian Investor Should Own

If you're looking into RRSP stocks, it's quite likely you've come across these on many, if not all, of the…

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

3 Reasons Your CPP Benefits Are More Valuable Than You Think

Holding iShares S&P/TSX Capped Composite Index Fund (TSX:XIC) in a TFSA can supplement your CPP.

Read more »

open vault at bank
Dividend Stocks

Don’t Get Cute; Just Buy Stability: Top Defensive TSX Stocks to Buy Now

A healthy risk tolerance is essential for most investors, but many stray from the tried and tested, hoping to find…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

TFSA Investors: Buy These 3 Stocks for $3,480 Yearly Tax-Free Income

One significant benefit of a TFSA-based dividend income is that it doesn’t weigh down your tax bill.

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

3 High-Yield Dividend Stocks That Are Screaming Buys Right Now

Are you looking for great income stocks? Here's a trio of high-yield dividend stocks that pay insane yields right now.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Transform a $5,000 TFSA Into a $50,000 Retirement Nest Egg

The TFSA is a powerful tool that can grow a small investment into a substantial retirement nest egg over time.

Read more »

A meter measures energy use.
Dividend Stocks

Is Fortis Stock a Buy, Sell, or Hold for 2025?

Fortis has increased its dividend annually for the past five decades.

Read more »

analyze data
Dividend Stocks

3 Dividend Stocks That Are Screaming Buys in November

Here are three top dividend stocks long-term investors won't want to ignore during this part of the market cycle.

Read more »