Enbridge Inc. (TSX:ENB): Is it Time to Buy This Canadian Dividend Stock?

Enbridge Inc. (TSX:ENB)(NYSE:ENB) is up more than 15% in the past month. Are more gains on the way?

Enbridge Inc. (TSX: ENB)(NYSE: ENB) is up more than 15% in the past month and has jumped nearly 25% after hitting a five-year low in April.

Let’s take a look at the current situation to see if more upside might be on the way.

Asset sales

Enbridge is working through a major transition designed to focus on regulated oil and gas pipeline and utility businesses. As a result, management has identified $10 billion in non-core assets it plans to monetize to reduce debt levels and fund ongoing development opportunities.

Originally, the company said it planned to raise about $3 billion through divestitures in 2018. As of the time of writing, the company has already signed deals for close to $7.5 billion, so demand is apparently strong for the company’s assets.

In May, Enbridge announced a $1.75 billion deal with the Canada Pension Plan Investment Board (CPPIB) to sell its Canadian renewable power assets and the company’s interest in two German offshore wind projects. At the same time, Enbridge also announced a US$1.12 billion agreement to sell natural gas gathering and processing assets in the United States to ArcLight Capital Partners.

On July 4, Enbridge said it is selling its Canadian natural gas gathering and processing businesses to Brookfield Infrastructure for $4.31 billion.

Growth

Enbridge is restructuring after its $37 billion acquisition of Spectra Energy last year. The purchase added strategic gas assets and provided an important portfolio of development projects, but the market didn’t like the impact on the balance sheet amid an era of rising interest rates and concerns that larger pipeline projects wouldn’t get built.

As a result, the stock slipped from $58 in late 2016 to $38 per share in April 2018.

The assets sales have helped restore investor confidence, and Enbridge recently received the green light from the Minnesota Public Utilities Commission to move ahead with the Line 3 Replacement Project. Enbridge hopes to complete the pipeline by the end of 2019.

The company is working through a total of $22 billion in near-term secured projects, of which $7 billion will go online in 2018.

Dividends

Enbridge previously said it intends to raise the dividend by 10-12% per year through 2020. The recent assets sales and Line 3 approval make it more likely the company will deliver on the guidance. Enbridge increased the distribution by 10% for 2018 and has hiked the payout for 23 straight years, with a compound annual dividend-growth rate of 11%.

Should you buy?

The recent developments on the assets sales and the Line 3 approval should remove some of the clouds that are hanging over the stock.

Investors who got in below $40 are already happy campers, but more upside should be on the way. At the current price, you can lock in a solid 5.6% yield and anticipate steady dividend growth in the coming years.

If you have some cash sitting on the sidelines, I think Enbridge looks attractive today.

Fool contributor Andrew Walker owns shares in Enbridge. The Motley Fool owns shares of Enbridge. Brookfield Infrastructure and Enbridge are recommendations of Stock Advisor Canada.

More on Dividend Stocks

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Manulife Stock Is a Top Stock to Buy If Interest Rates Stay Higher for Longer

Manulife combines rising earnings, a growing insurance business, and investment income that can benefit if rates stay elevated.

Read more »

Concept of rent, search, purchase real estate, REIT
Dividend Stocks

A Reliable Dividend Stock Perfect for Your TFSA

A 6.9% yield and monthly payouts make SmartCentres REIT a natural fit for a TFSA. Here's why the income keeps…

Read more »

Dividend Stocks

Ski-Doo’s BRP and the Tariff Tumble: Is This Beaten-Down Stock a Buying Opportunity?

BRP shares have fallen further as trade tensions hit its powersports business, but strong sales growth and cash generation could…

Read more »

Start line on the highway
Dividend Stocks

2 High-Yield Stocks Safe Enough That I’d Put Them in My TFSA

These 2 TSX dividend stocks pay yields near 4% to 5% and just posted double digit growth. Here's why I'd…

Read more »

diversification is an important part of building a stable portfolio
Dividend Stocks

Here’s What $50,000 in the Right Stocks Could Pay You Every Month

These four stocks could give you a steady income stream of $175/month. Here's how the portfolio could work.

Read more »

dairy milk spills out of glass
Dividend Stocks

Trump Just Banned Canadian Dairy and Booze Imports: Here’s How Saputo Investors Should React

Saputo faces fresh trade uncertainty after Trump’s latest Canadian dairy ban. Here’s how investors should react to this temporary trade…

Read more »

Middle aged man drinks coffee
Dividend Stocks

TFSA or RRSP? Your Tax Rate Could Change the Answer

Your current and future tax rates can help determine whether a TFSA or RRSP deserves your next retirement contribution.

Read more »

dividend stocks are a good way to earn passive income
Dividend Stocks

How I’d Structure My TFSA With $14,000 for Constant Income

I would split $14,000 across three stocks for income.

Read more »