Enbridge Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price is reasonable, it may even be cheap. Debt Ratios are mostly fine, but Liquidity Ratio is low. The Dividend Payout Ratios (DPR) are generally too high but their DPR Distributable Cash Flow is fine. The dividend yields are high with dividend growth low. See my spreadsheet on Enbridge Inc.

Is it a good company at a reasonable price? I still like this company and plan to keep the shares I have. I have enough in this company so I will not be buying any more. It does have a lot of debt. The dividend yield is very high currently at around 7%. The price currently seems reasonable by most of the testing. The Dividend Yield tests are saying the stock price is cheap.

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 on Mike Higgs’ list of Canadian Dividend Growth stocks. Enbridge is a low risk stock.

When I was updating my spreadsheet, I noticed that I have had this stock for 17.6 years, I made several purchases and I have made a total return of 12.18% per year with 6.64% from capital gains and 5.54% from dividends. Dividend payments have paid 151% of my stock’s original price.

From the chart below, it looks like growth has slowed down over the past 5 years, except for AEPS growth.

Year	Item	Tot. Growth	Per Year
5	Revenue Growth	20.12%	3.74%
5	AEPS Growth	43.37%	7.47%
5	Net Income Growth	2.37%	0.47%
5	Cash Flow Growth	70.57%	11.27%
5	Dividend Growth	42.56%	7.35%
5	Stock Price Growth	7.65%	1.48%
10	Revenue Growth	110.66%	7.74%
10	AEPS Growth	73.46%	5.66%
10	Net Income Growth	324.43%	15.55%
10	Cash Flow Growth	290.74%	14.60%
10	Dividend Growth	204.42%	11.78%
10	Stock Price Growth	23.01%	2.09%

If you had invested in this company in December 2012, for $1,032.48 you would have bought 24 shares at $43.02 per share. In December 2022, after 10 years you would have received $593.02 in dividends. The stock would be worth $1,270.88. Your total return would have been $1,863.10.

Cost	Tot. Cost	Shares	Years	Dividends	Stock Val	Tot Ret
$43.02	$1,032.48	24	10	$593.02	$1,270.08	$1,863.10

The dividend yields are high with dividend growth low. The current dividend yield is high (7% and above) at 7.01%. The 5 and 10 year dividend yields are good (5% to 6% ranges) at 6.32% and 5.17%. The historical dividend yield is moderate (2% to 4% ranges) at 3.62%. The dividend growth over the past 5 years is low (below 8%) at 7.4% per year over the past 5 years. The last dividend increase was in 2022 and it was for 3.2%. In 2019 and earlier, dividend growth was moderate (8% to 14% ranges), but since then it has been low, in the 3% range.) They have raised their dividends 27 years out of the 32 years I have followed.

The Dividend Payout Ratios (DPR) are generally too high but their DPR Distributable Cash Flow (DCF) is fine. The DPR for EPS for 2022 is 269% with 5 year coverage at 161%. This DPR has been over 100% since 2012. The DPR for Adjusted Earnings per Share (AEPS) for 2023 is 122% with 5 year coverage at 118%. This DPR has been above 100% since 2017. The DPR for Distributable Cash Flow is 63% with 5 year coverage at 65%. The DPR for Cash Flow per Share (CFPS) for 2022 is 74% with 5 year coverage also at 74%. This is too high and is better at 40% or lower. The DPR for Free Cash Flow (FCF) for 2022 is either 109% or 95% depending on where you look.

Debt Ratios are mostly fine, but Liquidity Ratio is low. The Long Term Debt/Market Cap is 0.68 and is fine. The Liquidity Ratio is 0.60 and is too low. If you add in Cash Flow after dividends, it is 0.81. If you add back current portion of the debt is just over 1.15 and is acceptable. The Debt Ratio is fine at 1.55. The Leverage (A/BK) and Debt/Equity Ratios are fine at 2.83 and 1.83.

The Total Return per year is shown below for years of 5 to 32 to the end of 2022. 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.
2017	5	7.35%	7.63%	1.48%	6.14%
2012	10	11.78%	7.06%	2.09%	4.97%
2007	15	12.16%	11.93%	6.70%	5.23%
2002	20	11.64%	13.60%	8.33%	5.27%
1997	25	10.80%	12.44%	7.84%	4.60%
1992	30	9.13%	16.68%	10.19%	6.49%
1990	32	8.54%	11.03%	7.04%	3.99%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 23.03, 30.82 and 38.60. The corresponding 10 year ratios are 24.39, 30.88 and 36.90. The corresponding historical ratios are 18.01, 19.35 and 23.04. The current P/E Ratio is 16.71 based on a stock price of $50.63 and EPS estimate for 2023 of $3.03. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 15.24, 18.05, 21.19. The corresponding 10 year ratios are 17.81, 20.68 and 24.76. The current P/AEPS ratio is 16.82 based on a stock price of $50.63 and AEPS estimate for 2023 of $3.01. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

I also have Distributable Cash Flow (DCF) data. The 5-year low, median, and high median Price/DCF Ratios are 8.51, 10.04 and 11.40. The corresponding 10 year ratios are 9.21, 10.58 and 12.69. The current P/DCF Ratio is 9.22 based on a stock price of $50.63 and DCF estimate for 2023 of $5.49. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $41.76 . The 10-year low, median, and high median Price/Graham Price Ratios are 1.20, 1.35 and 1.52. The current P/GP Ratio is 1.21 based on a stock price of $50.63. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10-year median Price/Book Value per Share Ratio of 1.97. The current P/B Ratio is 1.97 based on a stock price of $50.63, Book Value of $52,140M and a Book Value per Share of $25.75. This ratio at the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.

I also have a Book Value per Share (BVPS) value for 2023 of 28.20. However, the analyst calculates the Book Value different from me and their 10 year median Price/ Book Value per Share Ratio is 1.72. This BVPS value gives a P/B Ratio of 1.80 and Book Value of $57,105M with a stock price of $50.63. This ratio is 98% below their 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10-year median Price/Cash Flow per Share Ratio of 10.81. The current P/CF Ratio is 8.76 based on a stock price of $50.63, Cash Flow per Share estimate for 2023 of $5.78 and a stock price of $50.63. The current ratio is 14% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 3.62%. The current dividend yield is 7.01% based on dividends of $3.55 and a stock price of $50.63. The current dividend yield is 94% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 5.17%. The current dividend yield is 7.01% based on dividends of $3.55 and a stock price of $50.63. The current dividend yield is 36% 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 1.86. The current P/S Ratio is 1.95 based on revenue $52,567M, Revenue per Share of $25.96 and a stock price of $50.63. The current P/S Ratio is 5% above the 10 year median 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 is probably reasonable. It could also be cheap by the dividend yield test. The dividend yield testing certainly says that the stock price is cheap. The P/S Ratio test says it is reasonable but above the median. All the other testing says the stock price is cheap or reasonable and below the median.

When I look at analysts’ recommendations, I find Strong Buy (6), Buy (5), Hold (11) and Underperform (1). The consensus would be a Buy. The 12 month stock price is $58.00. This implies a total return of 21.57% with 14.56% from capital gains and 7.01% from dividends based on a stock price of $50.63. The Holds on Stock Chase still think it will do well in the long term. Paul Harris says that growth must come from US as infrastructure is hard to get done in Canada. In an earlier post, Bill Harris says that it has too much debt and you should sell.

Even the analysts on Stock Chase that give a Hold rating, like this company. Amy Legate-Wolfe on Motley Fool likes Brookfield Renewables better than this company. I do not like the Brookfield companies and they are far to complex to understand what you are really getting. Andrew Button on Motley Fool asks if at 7% yield, should you buy? The company issued a Press Release on their 2022 results. Simply Wall Street report on Yahoo Finance talks about insider buying. They issue 4 warnings of interest payments are not well covered by earnings; dividend of 7% is not well covered by earnings or cash flows; large one-off items impacting financial results; and profit margins (4.9%) are lower than last year (12.4%).

Enbridge owns extensive midstream assets that transport hydrocarbons across 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. Finally, the firm has a small renewables portfolio primarily focused on onshore and offshore wind projects. 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 Friday, March 24, 2023 around 5 pm. Tomorrow on my other blog I will write about Air Miles and BMO .... learn more on Thursday, March 23, 2023 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.