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.
When I was updating my spreadsheet, I noticed they have been paying out more in Dividends than they have received in earnings. However, the percentage of the payout is decreasing. They also give out adjusted earnings and with this, analysts expect the Dividend Payout Ratio to be under 100% in by 2021. They have continued to increase the dividends, so this points to the fact that they expect to cover the dividends in the future.
This stock has moderate to good dividend yield. The dividend yield has fluctuated over the years. The current dividend yield is good at 6%. The 5, 10 and historical median dividend yields are moderate at 4.23%, 3.37% and 3.49%.
This stock has moderate to good dividend growth. The dividend growth has also fluctuated over the years. Currently the dividend growth is good with the 5 year growth at 16.33% per year. There was no dividend growth between 1990 and 1995 and then growth was low until 2003. See dividend growth rates per year below.
The Dividend Payout Ratios are too high. The DPR for 2018 for EPS is 184% with 5 year coverage at 164%. Some analysts are using their adjusted EPS and with this the DPR is 101% for 2018 with 5 year coverage at 69%. The DPR for CFPS is also high currently with the DPR for CFPS for 2018 at 67% with 5 year coverage at 43%. It is the 5 year coverage that really counts. For DPR for CFPS I prefer this to be at 40% or less.
Debt Ratios are ok at present. The Long Term Debt/Market Cap Ratio for 2018 is 0.70. The Debt Ratio is 1.79 which is good and the Leverage and Debt/Equity Ratios are fine at 2.27 and 1.27 respectively. The Liquidity Ratio has some vulnerability as it is at just 0.63. This means that current assets cannot cover current liabilities. To get this above 1.00 you have to add back the current portion of the debt and cash flow after dividends. Then the ratio is a low one of 1.26. The vulnerability comes in if debt cannot be rolled over.
The Total Return per year is shown below for years of 5 to 28 to the end of 2018. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 16.33% | 2.85% | -1.79% | 4.64% |
| 2008 | 10 | 15.06% | 12.96% | 7.93% | 5.04% |
| 2003 | 15 | 13.25% | 12.42% | 7.96% | 4.46% |
| 1998 | 20 | 11.96% | 12.50% | 8.29% | 4.21% |
| 1993 | 25 | 9.96% | 14.87% | 9.84% | 5.03% |
| 1990 | 28 | 8.85% | 10.90% | 7.23% | 3.67% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 25.75, 30.94 and 35.21. The corresponding 10 year ratios are 25.55, 28.47 and 32.92. The corresponding historical ratios are 17.85, 19.35 and 21.01. The current P/E Ratio is 20.33 based on a currently stock price of $49.20 and 2019 EPS estimate of $2.42. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $40.77. The 10 year low, median, and high median Price/Graham Price Ratios are 1.51, 1.82 and 2.13. The current P/GP Ratio is 1.21 based on a stock price of $49.20. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 2.95. The current P/B Ratio is 1.61 based on Book Value of $61,723M, Book Value per Share of $30.53 and a stock price of $49.20. The current P/B Ratio is some 45% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 3.19%. The current dividend yield is 6.00% based on dividends of $2.95 and a stock price of $49.20. The current yield is 72% higher than the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 1.45. The current P/S Ratio is 1.91 based on 2019 Revenue of $48,716, Revenue per Share of $24.09 and a stock price of $49.20. The current ratio is some 41% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is we cannot ignore the testing using P/S Ratios? This says the stock is expensive whereas others say it is cheap. The 10 year median ratios for P/E, P/B and P/GP ratios are rather high. The current P/E Ratio is a bit high, but the ratios for P/GP and P/B are not. The dividend yield test says the stock is cheap between of the relatively high yield and the yield is high. However, the DPR Ratio is over 100% at 184% and this is not good. It maybe that the price is reasonable, but there are risks.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (9) and Hold (6). The consensus would be a Buy. The 12 months stock price is $53.19. This implies a total return of 14.11% with 8.11% from capital gains and 6.00% from dividends based on a current stock price of $49.20.
See what analysts are saying about this company on Stock Chase. They note that line 3 has been delayed, but most also like this company. Andrew Button on Motley Fool thinks this is a hot stock in recovery. A writer on Simply Wall Street says this stock is overvalue re P/E. Ratio. Melissa Arnold on GV Times says 9 out of 11 analysts rate this company as a buy. The Canadian Press says via Edmonton Journal that line 3 is being delayed.
Enbridge is an energy generation, distribution, and transportation company in the U.S. and Canada. Its pipeline network consists of the Canadian Mainline system, regional oil sands pipelines, and natural gas pipelines. Its web site is here Enbridge Inc.
The last stock I wrote about was about was Melcor Developments Inc. (TSX-MRD, OTC-MODVF) ... learn more. The next stock I will write about will be TransAlta Corp (TSX-TA, NSYE-TAC) ... learn more on Friday, March 22, 2019 around 5 pm. Tomorrow on my other blog I will write about GARP.... learn more on Thursday, March 21,2019 around 5 pm.
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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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