Enbridge Inc.

On my other blog I am today I am writing about the fact that I would not have bought any mutual funds if I knew then what I know now. continue...

I own this stock of Enbridge Inc. (TSX-ENB, NYSE-ENB). I first bought this stock in 2005 and then bought more in 2008 and 2009. This stock was on the Dividend Achievers, the Dividend Aristocrats list and also on Mike Higgs' list of Canadian Dividend Growth stocks. Enbridge is considered to be a low risk stock.

This is a dividend growth stock with good dividends and good dividend growth. The current dividend is 2.85% and the 5 year median dividend yield is 3%. Dividends have grown at the rate of 13.8% and 11.7% per year over the past 5 and 10 years. The last dividend increase was in 2014 and it was an 11.1%.

The dividend payout ratios are fine. The 5 year median DPR for earnings is 75.4%. The 5 year median DPR for cash flow is 31%. The DPR for 2013 for earnings was 229% as earnings were low. Low earnings also occurred in 2012. The DPR for earnings is expected to be 74% for 2014.

The DPR for 2013 for cash flow was 28%. The DPR for Funds from Operations was 66% and the 2013 DPR for FFO was 71%. The DPR for Adjusted Funds from Operations for 2013 was 63%.

The 5 and 10 year total return is 18.50% and 15.88% per year. The capital gain portion of this return is at 15.06% and 12.63% per year. The dividend portion of this return is at 3.44% and 3.25% per year. I bought this stock in 2005, 2008 and 2009. My total return is 18.45% per year with 3.51% per year from dividends and 14.94% from capital gain.

Outstanding shares have increased by 2.2% and 2% per year over the past 5 and 10 years. The revenue, adjusted EPS and cash flow have all gone up nicely over the past 5 and 10 years. Both EPS and net income has gone down, but comprehensive income has gone up. Analysts expect both net income and EPS will go up nicely for 2014 and 2015.

The Revenue per Share has increased by 12.9% and 18.8% per year over the past 5 and 10 years. Adjusted EPS has gone up by 13.6% and 9% per year over the past 5 and 10 years. CFPS has gone up by 19.2% and 12.7% per year over the past 5 and 10 years. Comprehensive income has gone up by 4.7% and 18.5% per year over the past 5 and 8 years.

Both EPS and net income reach a high point in 2008 and 2009 and have been going down since that time. For both EPS and net income analysts expect that the company will do better in 2014 and 2015. For both EPS and net income, the 5 year running averages have increased, but the increase for the last 5 years is much lower than for the last 10 years.

EPS is down by 21% and 5.8% per year over the past 5 and 10 years, but up by 2% and 5% per year over the past 5 and 10 years using 5 year running averages. Net Income was down by 17.9% and 3% per year over the past 5 and 10 years, but up by 5.5% and 8.5% per year over the past 5 and 10 years using 5 year running averages.

The Return on Equity has been above 10% until the last two years. In 2013 it was 2.7% and the 5 year median ROE is 10.9%. The ROE on comprehensive income for 2013 is 22% and the 5 year median is 10.9%.

As it seems with a lot of utilities, the Liquidity Ratio is low and the company depends on cash flow for current items. The Liquidity Ratio is 0.65 and even with the cash flow after dividends it is only 0.86. When this ratio is below 1.00, it means that current assets cannot cover current liabilities. If you take away the current portion of the long term debt the Liquidity Ratio becomes 0.88 and if you consider cash flow after dividends, the ratio is 1.17.

The Debt Ratios are a bit low with a 2013 ratio of 1.48 and a 5 year median ratio of 1.40. I would prefer it to be 1.50, but it is ok. The Leverage and Debt/Equity Ratio are rather typical of a utility at 3.10 and 2.10.

This stock is a dividend growth stock and after holding this stock for 9 years, I am making a 7.8% yield on my original 2005 purchase. This yield is where I expected it to be. However, the capital gain I have made on this stock is better at 14.9% than I expected. See my spreadsheet at enb.htm.

This is the first of two parts. The second part was posted on Tuesday, March 18, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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