Thursday, March 1, 2012

Enbridge Inc

I own this stock (TSX-ENB, NYSE-ENB). I have also done very well on this pipeline. I bought stock in 2005, 2008 and 2009. My total return is 20% per year. The portion attributable to dividends would be 3.48% per year or 17% of my total return.

They on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). My spreadsheet tells me that they have raised their dividends every year since 1997.

The 5 and 10 year growth in dividends over the past 5 and 10 years is 11.3% and 10.8% per year. The 5 year median dividend yield is 3.26%. The current dividend yield is almost 10% lower at 2.95%. For the stock I bought in 2005, 7 years ago, my dividend yield on my original purchases price is 6.3%.

If you had invested in this stock 5 and 10 years ago, you total return would probably have been around 16.5% and 16.6% per year, respectively. The return attributed to dividends over the past 5 and 10 years would probably be around 2.9% and 3.2% respectively. The portion of the return attributed to dividend over the past 5 and 10 years would probably be 17.7% and 18.9%, respectively.

The Dividend Payout Ratios are good. The 5 year median DPRs for earnings is 63% and for cash flow is 33%. The DPRs for 2011 were 75% and 28%. For 2012, they are expected to be 68% and 33%.

Growth is quite good for this company. The growth in revenue per shares was 10.3% and 14.7% per year over the past 5 and 10 years. The growth in EPS was 7.8% and 6% per year over the past 5 and 10 years. The growth in Cash Flow was 12.8% and 16.9% per year over the past 5 and 10 years. The growth in Book Value was 9.4% and 9.7% per year over the past 5 and 10 years.

The Return on Equity for 2011 was 12.7%. The 5 year median ROE was 13.6%. The ROE based on comprehensive income was lower at 10% with a 5 year median also at 10%. This ROE was still within the good range of 10% to 15%.

This utility company has lots of debt which is very common for utility companies. The Liquidity Ratio is the worse coming in at 0.88 with a 5 year median value of 0.93. The Company was in compliance with all debt covenants at the end of December 2011. Asset/Liability Ratios are a bit low with a ratio of 1.39 at the end of 2011 and a 5 year median value of 1.40.

The current Leverage ratio at 4.41 is higher than the 5 year median value of 4.00. The current Debt/Equity Ratio at 3.17 is also higher than the 5 year median value of 2.77. Both these current ratios are rather high. I would be happier with this stock if debt ratios were lower.

I have had very good returns with this stock, I certainly cannot complain. I am concerned about debt, but I find no other analyst that is worried. However, one did suggest that maybe raising money soon and one of the options would be to issue more shares.

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 here Enbridge. See my spreadsheet at enb.htm.

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 for stocks followed and investment notes. Follow me on twitter.

1 comment:

  1. Another marvelous review.

    I own this stock too. Too bad the CEO is going to retire this year. It will be hard to fill his shoes, don't you think so?

    I also own ENF. It's funny because I think you posted about ENB a little while back and it was my first comment on you blog and I said that I preferred to invest in ENF because it was cheaper lol... But see, a few years later, here am I investing in ENB.

    Why? Well, its very hard to find some quality stuff to invest in and to find something at the same time that make sense in term of dividend. But ENB is a good pick, no doubt about it.

    Please continue helping other to find quality stuff to invest into and my suggestion would be for you to invest exclusively on stuff you hold so I can continue to copy you on your every moves :)

    Isn't a good suggestion?

    That's actually a really good suggestion!!! lol

    Have a good evening, dear Susan.