Enbridge and Toromont

As I said on Friday, I finally bought some stock in this bear market. I bought Enbridge (TSX-ENB) and Toromont Industries Ltd (TSX-TIH). Enbridge is the better dividend payer and Toromont is the better value. Both these stocks are on the Dividend Achievers list at www.dividendachievers.com/ and the Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices) and also on Mike Higgs’ list at www.dividendgrowth.org/Report.htm. They are both considered to be dividend paying growth stocks. Enbridge is considered to be a Low risk stock and Toromont a Medium risk stock.

Both these stocks have Strong Buy ratings, Buy ratings, and Hold ratings on them. However, Toromont has more buy ratings and the net is a Strong Buy, whereas Enbridge’s net rating is a Buy. There is always diverging opinions on these ratings. The Enbridge stock is holding up well in this bear market, whereas the Toromont stock has lost some 25% of its value. For the Enbridge stock, the dividend yield hovers around 3% and currently is 3.27%, with the 5 and 10 year annual dividend increases at 10.1% and 8.8%. Meanwhile the dividend yield for Toromont is usually under 1.5% and is currently at 2.7%, with the 5 and 10 year annual dividend increases at 21.7% and 17%.

The current P/E rating for Enbridge is at 18 and this is just below the 5 year average of 18.8. The current P/E rating for Toromont is 10.7, which is quite a bit below the 5 year average of 17.7. Toromont generally does better over the longer term than Enbridge, but Enbridge is consistent performer. The price I paid for Toromont is below the Graham Price, but the price for Enbridge is above the Graham Price by some 28%.

All in all, I got Toromont at a very good price. However, Enbridge will probably do better in the coming recession than Toromont will. But, I am buying long term, so I feel I will end up better, in the long term, with both these purchases.

Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is www.enbridge.com. See my spreadsheet at http://www.spbrunner.com/stocks/enb.htm. I have updated it with the figures from the September 2008 quarterly report.

Toromont Industries has two sections. The Equipment Group is for their Caterpillar dealerships. The Compression Group, designs, engineers, fabricates, installs and services natural gas compression units; and hydrocarbon and petrochemical process compression systems; and industrial and recreational refrigeration compression systems. They do business in Canada only. Its web site is www.toromont.com. See my spreadsheet at www.spbrunner.com/stocks/tih.htm. I have updated it with the figures from the September 2008 quarterly report.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.