Friday, March 27, 2015

Enbridge Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Utility Stock. This pipeline stock has done well over the years and I am currently happy with my investment in this company. See my spreadsheet at enb.htm.

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 stock has a moderate dividend and moderate dividend increases. The Dividend is 3.05% and the 5 year median is 2.86%. The dividends have grown at 13.6% and 11.8% per year over the past 5 and 10 years. The last dividend increase was in 2015 and the increase was quite high at 32.9%.

The Dividend Payout Ratio against EPS has been high lately, but it is moderate for CFPS. The DPR for EPS was at 102% for 2014 and it has a 5 year median DPR of 102%. However, even with the large dividend growth for 2015, the DPR for 2015 is expected to be around 83%. The DPR for CFPS is at 27.6% in 2014 and the 5 year median is 29%.

The company has been given out an Adjusted EPS value each year for quite a number of years. This Adjusted EPS the company feels is a better reflection of earnings. The DPR for the Adjusted EPS for 2014 was at 75% and the 5 year median is 70%. A few analysts have been giving out an AFFO value for this stock for the last few years. For 2014 the DPR for AFFO is 53.6% and the 4 year median value is 52%.

I have done quite well with these shares. My Total Return is 19.35% with 16.14% from capital gains and 3.21% from dividends. The 5 and 10 year Total Return to date is at 20.08% and 15.86% per year with 16.70% and 12.86% per year from capital gains and 3.38% and 3% per year from dividends.

The outstanding shares have increased by 2.4% and 2.1% per year over the past 5 and 10 years. The revenue and cash flow has grown quite well over the past 5 and 10 years. Earnings and net income growth is non-existent over the past 5 years but moderate over the past 10 years. The Adjusted EPS has grown quite well, but AFFO has not grown at all.

Revenue is up by 24.7% and 19% per year over the past 5 and 10 years. Revenue per share is up by 21.8% and 16.7% per year over the past 5 and 10 years. Cash Flow has grown by 17.9% and 15.1% per year over the past 5 and 10 years. CFPS is up by 16.7% and 13.1% per year over the past 5 and 10 years.

EPS is down by 8.4% and up by 3.7% per year over the past 5 and 10 years. EPS has been a bit volatile and if you look at the 5 year running average, EPS is down by 4.4% and up by 2.3% per year over the past 5 and 10 years. Adjusted EPS is up by 9.7% and 9.8% per year over the past 5 and 10 years. AFFO is up by 0.3% per year over the past 3 years.

Until 2011, the Return on Equity was 10% or over. Since then it has been quite low. The ROE for 2014 was 5.5% and the 5 year median value is also 5.5%. However, the ROE on comprehensive income is much higher with the 2014 value at 10.5% and the 5 year median at 10%. This suggests that the earnings are better than they might first appear to be.

A negative for this company is the not so good debt ratios. The Liquidity Ratio for 2014 was 0.86. This means that the current assets cannot cover the current liabilities. If you add in cash flow after dividends the ratio barely makes 1.00 at 1.01. The company will rely on cash flow to pay current liabilities. The Debt Ratio is low, but adequate at 1.41. The Leverage and Debt/Equity Ratios are rather high, but this is not unusual for this sort of stock. The value for 2014 was 3.46 and 2.46, respectively.

This is the first of two parts. The second part will be posted on Monday, March 31, 2015 and will be 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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