Wednesday, June 3, 2009

Enbridge Inc 2

I am continuing my review this stock (TSX-ENB) today as I have received its annual report. I first bought this stock in 2005. I bought more of this stock it in 2008 and 2009. To date, including dividends, I have a return of 2.5% per year. I expect this to improve when the market recovers.

The first thing I looked at was Insider Buying and Selling. There is considerable insider selling, but it appears to be all options. This insider selling equals some .07% of the market value of this stock, so it is minor. I do not think that this tell us anything. This company has raised their dividend some 12% this year and this tell us much more. It says that the management has confidence in the current earning power of this company.

If you look at the ratios, I find that the yield at 3.8% is higher than the 5 year average of 3% and higher than the 10 year average of 3.2%. However, even though yield is not that good, it is better than normal. When I look at the P/E, which is 17, this is better than the 5 year average on close of 18 but not the 5 year low average of 15. However, the trailing P/E of 10 is much lower than the trailing P/E of both the 5 year average on close and the 5 year low average.

The current price is at the Graham Price for the end of 2008, but it is higher than the current estimate Graham Price. The Price/Book Value ratio is at 85 % of the 10 year average. Both the current Graham Price and the current P/E depends on earnings estimates, which may or may not be correct. The yield, Price/Book Value and the trailing P/E are based on actual values, so they may be better indicators. However, this all points to a relatively low current price or a fair current price.

There are lots of Strong Buy and Hold ratings on this stock, and a few Buys. The mean rating would be a Buy. (See my site for information on analyst ratings.) This stock is considered a low risk investment with a good dividend. On the other hand, this stock does depend on development of our Oil Sands.

As I said yesterday, I am currently happy with this stock and I intend to continue to hold on to it. This is a stock that is on everyone’s lists. It is on the Dividend Achievers list at, and the Dividend Aristocrats list at (see indices) and it was also on Mike Higgs’ list.

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 See my spreadsheet at

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 for a list of the stocks for which I have put up spreadsheets.

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