Enbridge Inc. or Pembina Pipeline Corp.: Which Is the Better Buy Today?

Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Pembina Pipeline Corp. (TSX:PPL)(NYSE:PBA) are two of the largest owners and operators of pipelines in North America, and both of their stocks represent very attractive long-term investment opportunities today.

However, the laws of diversification clearly state that we cannot buy both, so let’s take a closer look at each company’s earnings results in the first nine months of fiscal 2015, their stocks’ valuations, and their dividends to determine which is the better buy today.

Enbridge Inc.

Enbridge’s stock has fallen nearly 17% year-to-date, including a decline of over 9% since it released its earnings results for its three- and nine-month periods ending on September 30, 2015 on the morning of November 5. Here’s a summary of 10 of the most notable statistics from the first nine months of fiscal 2015 compared with the same period in fiscal 2014:

1. Adjusted net earnings increased 17.8% to $1.37 billion
2. Adjusted earnings per share increased 14.9% to $1.62
3. Revenue decreased 13.7% to $24.88 billion
4. Available cash flow from operations increased 20.1% to $2.28 billion
5. Average deliveries increased 9.8% to 2.29 million barrels per day in its Lakehead System segment
6. Average deliveries increased 9.9% to 2.17 million barrels per day in its Canadian Mainline segment
7. Average deliveries increased 10.5% to 770,000 barrels per day in its Regional Oil Sands System segment
8. Average throughput decreased 2.8% to 1.65 billion cubic feet per day in its Alliance Pipeline U.S. segment
9. Average throughput decreased 4.9% to 1.49 billion cubic feet per day in its Alliance Pipeline Canada segment
10. Gas distribution volumes decreased 0.9% to 329 billion cubic feet

At today’s levels, Enbridge’s stock trades at 23 times fiscal 2015’s estimated earnings per share of $2.16 and 19.7 times fiscal 2016’s estimated earnings per share of $2.52, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 62.2.

In addition, Enbridge pays a quarterly dividend of $0.465 per share, or $1.86 per share annually, giving its stock a 3.75% yield. It is also very important to note that it has raised its annual dividend payment for 19 consecutive years, and it expects to increase it by another 14-16% annually through 2019.

Pembina Pipeline Corp.

Pembina’s stock has fallen over 25% year-to-date, including a decline of over 2% since it released its earnings results for its three- and nine-month periods ending on September 30, 2015 after the market closed on November 5. Here’s a summary of 10 of the most notable statistics from the first nine months of fiscal 2015 compared with the same period in fiscal 2014:

1. Net earnings decreased 7.7% to $276 million
2. Earnings per share decreased 17.6% to $0.70
3. Revenue decreased 29.5% to $3.39 billion
4. Net revenue decreased 5.6% to $1.1 billion
5. Adjusted cash flow from operating activities decreased 2.4% to $598 million
6. Total throughput volume increased 4.8% to 1,718,000 barrels per day
7. Conventional Pipelines revenue volumes increased 8.7% to 612,000 barrels per day
8. Oil sands and heavy oil contracted capacity remained unchanged at 880,000 barrels per day
9. Gas Services average revenue volumes increased 36.6% to 112,000 barrels of oil equivalent per day
10. Midstream natural gas liquids sales volumes decreased 0.9% to 114,000 barrels per day

At today’s levels, Pembina’s stock trades at 30.2 times fiscal 2015’s estimated earnings per share of $1.05 and 22.5 times fiscal 2016’s estimated earnings per share of $1.41, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 32.5.

In addition, Pembina pays a monthly dividend of $0.1525 per share, or $1.83 per share annually, giving its stock a 5.8% yield. It is also important to note that the company has increased its dividend for four consecutive years.

Which pipeline stock is the better buy today?

Here’s how each company ranks when directly comparing their earnings results, valuations, and dividends:

As the chart above shows, Pembina Pipeline has a higher dividend yield, but Enbridge reported stronger earnings results in the first nine months of fiscal 2015, its stock trades at more attractive forward valuations, and it has a much more extensive track record of increasing its dividend, giving it the easy win in this match up. All Foolish investors should strongly consider making it a core holding today.