Monday, March 22, 2010

Enbridge Inc

I am reviewing this stock (TSX-ENB) today as the annual reported for December 2009 has been published and this is a stock that I own. I bought shares in this company in for the first time July 2005 and I purchases more stock in November 2008 and January 2009. To date I have made a return of 11.3% per year. I am making a yield of 4.4% on my investment. About 3% per year of the return on this investment is in dividends and the rest being in capital gain.

All the growth figures on this stock are very good. The odd thing about this stock is that the company provides two earnings figures, one the regular one required re GAAP and also an adjusted earnings figure. Most analysts that follow this company give earnings estimates based on adjusted earnings. According to the company, to get the adjusted earnings, they adjust their earnings for non-recurring or non-operating factors. My spreadsheet gives the full definition of these adjusted earnings.

This company is on dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices). The great thing about this company is that they give a decent dividend yield of just over 3% per year and the dividend has been increasing at around 10% per year. Even during the recent recession, they increase their dividends. They have also increased their dividends for the current year by some 14.9%. The Return on Equity for this company is also very good at 21.4% for the year ending in 2009 and the 5 year average is 17%.

On the negative side, the Liquidity ratio is a bit low at 0.95; however, the current assets can be covered by the cash flow generated by the company. The Asset/Liability ratio is also a bit low at 1.35. I like to see this ratio at 1.50. The other negative is the high accrual ratio of 10%. With high accrual ratio, you wonder if the earnings are a proper reflection of what a company is actually earning. However, this company seems to deflect this concerning in giving an adjust earnings which many analysts rely on.

Needless to say, I am pleased with my investment in this company and I plan to continue to hold what shares I have.

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. Also, look at other investing notes on my website at Follow me on twitter.

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