Market Crash: Big Buy Signal in 1 Top Stock

The market crash 2020 put Enbridge (TSX:ENB)(NYSE:ENB) stock on sale. Insiders are buying loads of this top dividend-growth stock that yields 9%!

| More on:

The stock market crash of 2020 combined with the oil price war dragged down Enbridge (TSX:ENB)(NYSE:ENB) stock as much as 41% in a mere month!

The world looks like it’s coming to an end for energy companies, as the West Texas Intermediate (WTI) oil price is absurdly low at US$22 per barrel at writing.

The problem is that we have low energy prices coupled with an oil glut and dramatically lower demand due to the coronavirus pandemic.

However, the North American energy infrastructure leader has proven it has strong resilience against low energy prices. While Enbridge has dealt with low oil prices multiple times before, it increased its dividend through thick and thin.

Amid stock market crash 2020, big buy signal in Enbridge stock

This stock market crash must have brought Enbridge stock to a level that’s absurdly cheap so as to attract massive insider buying.

In the first quarter so far, 10 insiders bought shares in ENB stock from the TSX and NYSE markets. Insiders bought, in total, more than $1.7 million worth of shares.

Moreover, their average cost, for this massive insider buying, was $45.80 per share at writing. The median cost was $48.88 per share across 24 transactions.

Insider buying is seen as a big positive of the stock in question, as there’s only one reason for insiders to buy — they think the stock is worth much more.

Right now, you can buy Enbridge at a discount of 19% or 24%, respectively, from the average and median prices that insiders recently bought the dividend stock at.

If this much insider buying is not a big buy signal for investors like you and me who’ve been watching the dividend stock, I don’t know what is!

Notably, one insider, Enbridge Chief Legal Officer and Executive Vice President Robert Ross Rooney was responsible for buying 62% or over $1 million of the stock.

Rooney strategically stretched the purchases across five transactions to net an average price of $43.95 per share at writing.

Stock market crash 2020 doesn’t look like it will end anytime soon, however. So, it would be in investors’ best interests to average into their positions over time.

Although insiders are bullish on the stock, the short-term stock price movements are controlled by the emotional market rather than not the long-term fundamentals of the strong company.

Stock market crash 2020: Why Enbridge remains a safe dividend stock

The stock market crash of 2020 is scarier than the other crashes because it’s a flash crash with no bottom in sight. The backdrop is the COVID-19 pandemic that countries around the world are fighting. In the meantime, the pandemic is bringing global economies to a halt.

Take a deep breath and rest easy with Enbridge stock in your portfolio.

Although the outlook of the energy environment looks gloomy, let’s not forget that nearly half of Enbridge’s EBITDA is from natural gas transmission, distribution, and storage, and power and other assets. These are necessity products and services.

Additionally, there is a high level of defensiveness in Enbridge’s EBITDA, of which 98% of which is backed by long-term contracts and 95% are from investment-grade counterparties. Its cash flow therefore has little commodity price risk and is relatively stable.

Furthermore, the company highlighted that its top 20 customers, which are 90% refiners and integrated producers, represent 86% of its liquids pipeline revenue.

The Foolish bottom line

The stock market crash has pulled down Enbridge stock to a basement bargain price! This price is meaningfully lower than the massive insider buying of $1.7 million worth of Enbridge stock in February and March so far.

This is a big buy signal!

Right now, you can buy Enbridge at a tremendous discount for a dividend yield of about 9%. What are you waiting for?

Want more value stocks? Check these out.

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 Kay Ng owns shares of Enbridge. The Motley Fool owns shares of and recommends Enbridge.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

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

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »