Enbridge (TSX:ENB) is arguably one of the most reliable dividend-paying stocks in Canada. Besides other fundamental factors, the Canadian energy infrastructure giant’s solid dividend-growth track record makes it a top pick for income investors. Remarkably, ENB stock has been rewarding its investors with attractive dividends for nearly seven decades and has raised its annual dividend payouts for 29 consecutive years.
But is now the right time to buy ENB stock? Let’s take a closer look at some main reasons that could influence your decision in April 2024.
Buy Enbridge amid ongoing macroeconomic uncertainties
The Canadian stock market is currently at its highest level in history as the S&P/TSX Composite benchmark trades with solid 6.7% year-to-date gains due mainly to high expectations that the central banks in the United States and Canada will soon start slashing interest rates.
However, the possibility that persistent inflationary pressures will force central banks to delay interest rate cuts can’t be ruled out completely. Considering that, the stock market may still remain highly volatile, which could pose a risk for investors seeking stability and steady income. That’s why dividend stocks like Enbridge could be a very attractive option for long-term investors who want to weather the market turbulence and enjoy reliable cash flows.
Enbridge’s large-scale and strong financial growth trends
If you don’t know it already, Enbridge is one of North America’s largest energy infrastructure companies, with a huge network of liquids and gas pipelines and energy storage facilities. The company transports roughly 30% of the crude oil and 20% of the natural gas consumed in North America, making it a large essential service provider for the energy sector.
Even as several other energy giants have faced the heat of the global pandemic and other macroeconomic challenges in the last few years, Enbridge’s bottom line has steadily grown. In the last five years, the company’s total revenue witnessed a 6% decline from $46.4 billion in 2018 to $43.6 billion in 2023. Despite lower revenues, its adjusted annual earnings during the same period have gone up by around 5% from $2.65 per share in 2018 to $2.79 per share in 2023.
To add optimism, ENB’s adjusted net profit margin has also expanded significantly in the last five years from 9.8% to 13.2%, reflecting the company’s ability to increase its operational efficiency and reduce costs.
Besides these positive factors, Enbridge’s growing footprints in North America, this crude oil export, and renewable energy segments further brighten its long-term growth outlook.
Lock in ENB stock’s high yield in April 2024
Enbridge’s highly reliable business model allows it to generate stable and predictable cash flows from its long-term contracts and regulated assets, which help it keep rewarding investors with increasing dividends.
In 2023, weak prices of energy products and an energy sector-wide selloff took ENB stock down by about 10%. The stock hasn’t seen any notable change in 2024 so far, currently trading at $47.90 per share with a market cap of $101.8 billion, making it look undervalued.
The recent losses in its share prices, however, have made Enbridge’s dividend yield look even more attractive, which currently stands at 7.7% on an annualized basis. Given that, it could be the right time for investors to lock in ENB’s high yield by adding it to their long-term portfolio right now.
