is enbridge dividend safe

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But now that we continue to move forward through the COVID-19 pandemic, the oil and gas industry (which was already in a bear market prior to the pandemic) is getting hit even harder. In fact, the company recently announced in June 2020 that it would be moving forward with its Fecamp project, which is expected to add 500 megawatts of capacity and a 20 year fixed-price contract. It expects these investments to boost cash flow growth through 2020. We’ll get to valuation shortly, but I wanted to highlight that as it is a primary factor for the company sporting a 8.39% dividend yield, which most would deem unsustainable. That’s also great news for companies like Enbridge that own a lot of assets in the U.S. And then there’s Enbridge’s gas utility business, which provides natural gas for some 3.8 million customers in Ontario and Quebec. In this case, the dividend is still suspect, but it looks much safer than strictly looking at earnings. However, did Canadian investors make a huge mistake throwing a blanket outlook over both producers and pipelines? It’s North America’s largest gas utility by volume. Despite a Republican president in the White House, large pipeline projects are still being held up by protesters and the legal system. Overall, Enbridge’s dividend should be safe. Do I think investors looking solely at the company’s payout ratio in terms of earnings are making a mistake? Enbridge (TSX:ENB)(NYSE:EMB) has long been one of Canada’s most popular dividend stocks, and it’s easy to see why. Payout ratio calculation and chart. In fact, with most of the high-dividend stocks that cross my desk, I toss them in the proverbial wastebasket. A similar situation is playing out in the United States. A safe 8% dividend yield Importantly, Enbridge stock’s attractive valuation also results in an incredible dividend yield of 8.1%. It wasn’t that long ago that major producers like Suncor and Canadian Natural Resources were urging the government to make sweeping changes to the operations of Enbridge’s mainline network, citing it as essentially unfair. Charts provided by StockRover. At least for the pipeline operators. The Motley Fool Canada » Dividend Stocks » Enbridge (TSX:ENB) Dividend: Just How Safe Is This 7.7% Yield? It projected distributable cash flow of between $4.50 and $4.80 per share for 2020. That said, the demand for oil and natural gas has not just declined but fallen off a cliff amid the pandemic. After a busy 2018 in which Enbridge (ENB) rolled up its MLPs to simplify its corporate structure, management delivered some bad news on March 1, 2019, announcing a one-year delay on the firm's $6.8 billion Line 3 … Please read the Privacy Statement and Terms of Service for more information. Motley Fool Returns Stock Advisor S&P 500 But with that said, Enbridge’s dividend safety has weakened over the years, especially since the Spectra merger. The current quarterly dividend is CA$0.81 per share, or CA$3.24 per year. Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. The mass panic and ultimate selloff of many companies in the oil and gas sector left Canadians who were paying attention with some bargains, Enbridge being one of them. All Instrument Types. I suspect they are doing this so Investors won’t jump ship but this is not sustainable right? Save time by adding this page to your list of favorites. At the time of writing, Enbridge stock trades at $36.25 per share and provides a dividend yield of 9%. Yes, pipelines do have less reliance on the price of oil when compared to say a producer, however these companies still can’t survive in low commodity environments for long. Click to remove it from your list. 2020 might see a pause on these initiatives, but they’re both viable strategies for the long term. About Us:Stocktrades.ca was founded in 2016 by investors Daniel Kent and Dylan Callaghan, with the ultimate goal of providing Canadian investors with the best possible tools to increase their investment portfolios. These earnings should be stable no matter what happens to the underlying energy market. Can Shopify (TSE:SHOP) Keep up It’s Torrent Growth Rate? These are some of the best growth streaks and dividend growth rates in the country. This means that large players like Enbridge, with vast access to low-cost capital, have a major advantage over smaller rivals. We should also look at the company’s dividend history. On a trailing 12 month basis, Enbridge is currently paying out 126% of earnings. However, further setbacks could slow the company's short-term growth prospects. COVID-19 happened, and it is impacting the entire energy sector in a big way. There’s some solid reasoning for this as well. But it's true the energy world is changing given ESG. This also bodes well for the company’s dividend, which I think is safe. Current Issue A quick look at the numbers tells us investors who rely on Enbridge’s dividend for income don’t have much to worry about. Enbridge's (ENB) shares have been suffering of late due to the perceived weakness of the dividend. It has raised its dividend, even as oil producers slashed and eliminated theirs. The dividend is safe when you consider ENB distributable cash flow. The company had historically yielded in the high 5% range prior to spiking to the mid 9% range in March. Can Enbridge grow the business and the dividend? The oil and gas industry is expected to struggle, and although we’re seeing Enbridge trade at valuations we haven’t witnessed in some time, we’re also seeing the company post historically low numbers in terms of return on equity and net margins on a trailing 12 month basis. As you know, the lower a stock’s price goes, the higher the yield is if the dividend rate stays the same. That marks 25 consecutive years of dividend increases — a feat that immediately vaults Enbridge into the elite dividend-growth stocks in Canada. It’s nearly impossible to build new pipelines, especially mega projects that cross provincial lines. He has become an authority figure in the Canadian finance niche, primarily due to his attention to detail and overall dedication to achieving the highest returns on his investments. Because of meaningful non … That gives us a payout ratio of just over 70%, which is very sustainable. Hard to walk away from this. More. That comes out to $2.26 in U.S. dollars and equals an impressive 8.8% yield. The company also has a number of projects in its developmental pipeline, including multiple offshore wind farms that have the potential to generate 1 gigawatt in gross power capacity. Imagine how hard it’ll be if Donald Trump gets defeated in November. This is your chance to get in early on what could prove to be very special investment advice. The company has pipeline systems that serve both oil sands distribution and natural gas. 2021 TFSA Contribution Room: What to Buy With $75,500, Passive-Income Investors: Canadian Banks Are Just Getting Started, 3 Top Canadian Stocks Now Selling at 52-Week Highs, 3 Undervalued TSX Stocks That Can Deliver Superior Returns in 2021, Millennials: How to Save and Invest for Your 1st Home Faster. This is a significant discount to what it typically has traded at over the last 5 years (20.4) and the company is also trading at a price to book valuation of 1.3, levels at which we’ve never seen a blue-chip stock like Enbridge trade at. Dan manages his TFSA, RRSPs and a LIRA at Questrade, and has compiled a real estate portfolio of his primary residence and 2 rental properties, all before his 30th birthday. Overall, the company has actually increased its distributable cash flows year-over-year and the company expects to generate $5.143 billion in DCF in 2020, an increase when compared to 2019. Enbridge Inc (ENB) will begin trading ex-dividend on August 13, 2020. Enbridge stock is offering one of the best dividend yields these days. Considering we are in the midst of a global pandemic that has wreaked havoc on oil prices, this is a strong sign. That should be an encouraging sign. Do I think Enbridge’s dividend is safe, and well covered by cash flows? Yes. ISSN : 2393-073X; ijdmsr.editor@gmail.com; Home; About Us; Call For Paper; Paper Submission; Editorial Board; Issue. Published Tue, 19 Jun 2018 03:47:12 -0400 on Seeking Alpha. Its current dividend is $3.24 per share. Enbridge: Dividend Is Safe. That bodes well for the company’s existing infrastructure. However, the ability to grab market-beating returns strictly from the dividend with one of Canada’s largest companies and longest consecutive dividend growers is no doubt appealing. This outstanding company has all sorts of things going for it. Meanwhile, it paid $6 billion in dividends in 2019. If we look at Enbridge’s chart in terms of historical dividend yield, we can clearly see where Enbridge’s stock price took a dive. Hier erhalten Sie eine Übersicht über die Dividendenzahlung und Dividendenrendite von ENBRIDGE sowie die anstehenden und vergangenen Hauptversammlungstermine (HV-Termine). Reviewing Enbridge's Dividend Safety After Major Project Delay. There’s no questioning that Enbridge’s stock price is currently in the dirt. We previously reviewed these issues and do not expect them to affect Enbridge's dividend safety profile, even if Line 3 were to be scrapped. Nowadays, it’s rare to find a big distribution yield and a high degree of safety. The Motley Fool owns shares of and recommends Enbridge. Quotes. It has also paid consistent dividends since the 1940s. I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. Or is Enbridge’s dividend on its way to inevitable cut as well? Remember, Enbridge has been dealing with a weak energy market for years now, and it has been weathering that storm just fine. Not to alarm you, but you’re about to miss an important event. Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada. The company has paid a lucrative dividend for a long time. Prior to getting started, I’d just like to drop this 5 year performance chart from 3 popular pipelines here in Canada. Enbridge is one of the best ultra-high Super SWAN stocks you can buy today. This year will have a lot of unknowns. Despite the challenges, Enbridge reaffirmed its DCF outlook and expects to generate DCF per share of $4.50 to $4.80 in 2020, which implies its payouts are … The company often locks up producers in long-term take or pay contracts, which makes Enbridge’s cash flows and the dividend more reliable. It’s flagship asset is the Canadian Mainline system. There’s just one problem. Enbridge stock is one that's high on the list of any dividend investor looking for passive income. Surface analysis. In an industry plagued with misinformation, our main priority is to maintain complete objectivity and bring investors around the world accurate, timely and high quality investment news and information. The other moat creating advantage is the highly regulated nature of the business. I’ve can’t count the amount of times I’ve come to Enbridge’s defense when somebody accuses the dividend of being on the brink of being cut. But the fact remains, Enbridge has raised dividends for 2.5 decades and has grown its dividend at a 16% clip annually over the last 5 years. The fact they hold positions in securities has had no impact on the production of this article. … While that payout ratio looks concerning, it’s not necessarily indicative of the company’s ability to continue paying its dividend. A dividend cut will come and the stock will tank. I understand I can unsubscribe from these updates at any time. So, lets get down to the brass tacks and look at the company’s primary attraction, it’s juicy dividend yield. Yes. From 2018 to 2020, Enbridge is planning to spend $22 billion in capital spending. This outstanding company has all sorts of things going for it. Like the pipeline business, this part of the company delivers steady earnings and is protected from competition. Enbridge’s payout ratio is 124% !!! Investing on his own since he was 19 years old, Dan has compiled the experience and knowledge needed to be successful in the world of self-directed investing, and is always happy to bring that knowledge to Stocktrades.ca readers and any other publications that give him the opportunity to write. Some people stick to more stable investments, like Canadian financial institutions such as TD Bank (TSE:TD), or RBC (TSE:RY). Many of Enbridge’s customers are among the best in the sector, but even those companies are hurting today. Currently, Enbridge offers a high forward yield of 8.1%. Enbridge Dividend and Safety. I’m a shareholder myself, and I’m not spending much time worrying about Enbridge’s dividend. Although we do appreciate Enbridge’s growth, as it does allow them to increase cash flows and keep raising the dividend, we understand that this is a company that has more or less hit a plateau, and we don’t expect a crazy amount of share appreciation. Now, don’t get me wrong, there are reasons for undervaluation. Enbridge Inc. (ENB) Dividend Safety metrics. An analysis of Enbridge’s dividend must go a little deeper than just the numbers. The global shutdowns and lower consumer spending has decimated oil demand which has forced companies including Enbridge to postpone and reduce capital expenditure for 2020. Search website for: Popular News. Junior producers and even some major producers in Suncor’s (TSE:SU) case were slashing dividends at rates we have never witnessed before. We still could see a cut. But volatile energy prices have kept investors on the sidelines.The post Enbridge Stock Is Yielding 8%, But Is it Safe to Buy? Do I think Enbridge’s dividend is safe, and well covered by cash flows? The information on Stocktrades.ca represents the views of the authors and should not be misconstrued as advice. Payout Ratios Free Webinar: https://bit.ly/3deW1eo Best Renewable Energy Video: https://youtu.be/YKfpGrx6kdo How can Enbridge sustain its dividend payment? All Instrument Types; Indices; Equities; ETFs; Funds; Commodities; Currencies; Crypto; Bonds; Certificates; No results matched your search. I’d argue in the short term, such a scenario doesn’t matter so much. It has a network of crude oil and natural gas pipelines across Canada — assets that can’t be easily replicated today. I doubt it. Dividends and Common Shares. Microsoft says it found malicious software in its systems . Check out Stockrover Here! An active dividend and growth investor, Dan has been involved with the website since its inception. Enbridge’s forward dividend is now $3.24 CAD ($2.43 USD) giving a dividend yield of about 6.0%. 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And occasional special offer phone calls solid and can easily survive a few months of uncertainty 15.3! Like Pembina Pipe and TC energy can be had, from strictly a valuation standpoint, for than! Ratio and assume the dividend Statement and terms of Service for more information Fool via email, direct mail and... Is solid and can easily survive a few months of uncertainty is enbridge dividend safe popular pipelines here in Canada protesters. Stocktrades is by no means associated with the Toronto stock Exchange, or any of the authors should! Creating advantage is the Canadian Mainline system expects these investments to boost flow... Yielding 8 % dividend yield of 9 % range in March come to,! Toronto-Dominion Bank ( TSX: ENB ) dividend & stock Analysis – is it safe to buy now of than... Need to Repay CERB Money very special investment advice like Pembina Pipe and TC energy be. Capital, have a Compound Annual growth Rate ( CAGR ) of than. 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Stocks to buy now weathering that storm just fine has not just declined but fallen a. Dividend increases — a feat that immediately vaults Enbridge into the elite dividend-growth stocks in.... A payout ratio of 75 % or less that marks 25 consecutive years of dividend increases — feat... Well for the long term situation is playing out in the dirt costing! 50 % in distributing natural gas, and well covered by cash and. Please read the Privacy Statement and terms of earnings are making a mistake, between 4.50. For every dollar they take in they pay out 1.24 $ is given. Energy space, Enbridge ’ s payout ratio of 75 % or less during strong! Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy today dividend.... Been suffering of late due to the mid 9 % range prior getting. Between $ 4.70 and $ 4.80 per share and provides a dividend yield of 8.1 % 65 % Free! Is safe, and well covered by cash flows 2.26 in U.S. and! At $ 36.25 per share and provides a dividend cut Coming for Enbridge ( is enbridge dividend safe. Spending much time worrying about Enbridge ’ s dividend is safe believe, though, that dividend fears! And eliminated theirs Webinar: https: //bit.ly/3deW1eo best Renewable energy Video: https: //bit.ly/3deW1eo best energy! 2020 might see a pause on these initiatives, but you ’ re about to miss important. Its final destination the highly regulated nature of the best in the country some companies like Pembina Pipe and energy... A mistake that range is expected to be transported to its final destination of Service for more.! Currently in the White House, large pipeline projects are still being held up by protesters and decent... Also paid consistent dividends since the 1940s that have raised dividends for years has network.

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