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 I have done well with this stock. My total return is 12.79% per year with 8.01% per year from capital gains and 4.78% per year from dividends. The 5 year total return is just 1.37% per year with 2.88% per year from capital loss and 4.25% per year from dividends. I also noted that 5 years ago the P/E Ratio was quite high at 43.61.
The dividend yields are moderate with dividend growth mostly moderate. The current dividend yield is good (7% or higher) at 8.45%, but stock prices have been diving. The 5, 10 and historical dividend yields are 4.73%, 3.37% and 3.49%. The dividend growth for the past 5 years has been higher than before at 16.09% per year (good range (15% and higher), but the last dividend increase was for 9.8% for 2020, which is lower also than in the past.
The Dividend Payout Ratios should be improved. DPR for EPS for 2019 was 11% with 5 year coverage at 158%. They give out an Adjusted EPS which has a DPR for 2019 of 111% with 5 year coverage at 102%. They also give out a Distributable Cash Flow and the DPR for 2019 for this is 65% with 5 year coverage at 59%. The DPR for CFPS for 2019 is 76% with 5 year coverage at 52%. The DPR for Free Cash Flow for 2019 is 161% with 5 year coverage at 877%.
Debt Ratios are fine, but the Liquidity could be better. The Long Term Debt/Market Cap Ratio for 2019 is good at 0.57. The Liquidity Ratio for 2019 is 0.55. If you added in cash flow after dividends and add back in the current portion of the long term debt, it is 1.05 a very low value. The Debt Ratio is good at 1.74. The Leverage and Debt/Equity Ratios for 2019 are fine at 2.35 and 1.35.
The Total Return per year is shown below for years of 5 to 29 to the end of 2019. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 16.09% | 1.37% | -2.88% | 4.25% |
| 2009 | 10 | 14.84% | 12.55% | 7.82% | 4.73% |
| 2004 | 15 | 13.24% | 12.99% | 8.63% | 4.36% |
| 1999 | 20 | 12.13% | 15.13% | 10.38% | 4.75% |
| 1994 | 25 | 10.38% | 16.79% | 11.29% | 5.50% |
| 1989 | 30 | 8.89% | 11.24% | 7.70% | 3.54% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 21.36, 25.99 and 30.62. The corresponding 10 year ratios are 23.55, 28.47 and 32.91. The corresponding historical ratios are 17.73, 18.66 and 21.01. The current P/E Ratio is 14.80 based on a stock price of $38.34 and 2020 EPS estimate of $2.56. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $41.27. 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 0.93 based on a stock price of $38.34. 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 1.33 based on a Book Value of $58,296M, Book Value per Share of $28.79 and a stock price of $38.34. The current P/B Ratio is 55% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 3.49%. The current dividend yield is 8.45% based on dividends of $3.24 and a stock price of $38.34. The current dividend yield is 142% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 years median dividend yield of 3.37%. The current dividend yield is 8.45% based on dividends of $3.24 and a stock price of $38.34. The current dividend yield is 151% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 1.48. The current P/S Ratio is 1.53 based on 2020 Revenue estimate of $50,124M, Revenue per Share of $24.75 and a stock price of $38.34. The current ratio is 4.5% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price could be cheap, but may not be. Most of the testing is showing that the stock price is cheap except for the P/S Ratio. The P/S Ratio testing is showing the stock price as being reasonable, but above the median. I do not think you can disregard the P/S Ratio.
Is it a good company at a reasonable price? I still like this company and I will hold on to the shares I now own. However, even though the price maybe reasonable, it would appear not to be cheap and now may not be the time to buy.
When I look at analysts’ recommendations, I find Strong Buy, (9), Buy (6), Hold (11) and Underperform (1). The consensus would be a Buy. The 12 month stock price is $56.74. This implies a total return of 56.44% with 47.99% from capital gains and 8.45% from dividends.
See what analysts are saying about this stock on Stock Chase. Analyst think it is a buy because a pull back on this stock because of energy prices makes no sense. Daniel Da Costa on Motley Fool thinks this stock is currently a buy. A writer on Simply Wall Street looks at insider selling on this stock. A Writer on Simply Wall Street points out that the company is payout too much of its earnings as dividends. John Flesher on ABC News talks about Enbridge, its Great Lakes tunnel and the court challenge.
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. The company also owns and operates a regulated natural gas utility and Canada's largest natural gas distribution company. Additionally, Enbridge generates renewable and alternative energy with 2,000 megawatts of capacity. Its web site is here Enbridge Inc.
The last stock I wrote about was about was Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF) ... learn more. The next stock I will write about will be TransAlta Corp (TSX-TA, NSYE-TAC)) ... learn more on Wednesday, March 18, 2020 around 5 pm. Tomorrow on my other blog I will write about Canadian Tire and Short Sellers.... learn more on Tuesday, March 17, 2020 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.
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