Market Crash: Big Buy Signal in 1 Top Stock

The market crash 2020 put Enbridge (TSX:ENB)(NYSE:ENB) stock on sale. Insiders are buying loads of this top dividend-growth stock that yields 9%!

| More on:
A stock price graph showing declines

Image source: Getty Images.

The stock market crash of 2020 combined with the oil price war dragged down Enbridge (TSX:ENB)(NYSE:ENB) stock as much as 41% in a mere month!

The world looks like it’s coming to an end for energy companies, as the West Texas Intermediate (WTI) oil price is absurdly low at US$22 per barrel at writing.

The problem is that we have low energy prices coupled with an oil glut and dramatically lower demand due to the coronavirus pandemic.

However, the North American energy infrastructure leader has proven it has strong resilience against low energy prices. While Enbridge has dealt with low oil prices multiple times before, it increased its dividend through thick and thin.

Amid stock market crash 2020, big buy signal in Enbridge stock

This stock market crash must have brought Enbridge stock to a level that’s absurdly cheap so as to attract massive insider buying.

In the first quarter so far, 10 insiders bought shares in ENB stock from the TSX and NYSE markets. Insiders bought, in total, more than $1.7 million worth of shares.

Moreover, their average cost, for this massive insider buying, was $45.80 per share at writing. The median cost was $48.88 per share across 24 transactions.

Insider buying is seen as a big positive of the stock in question, as there’s only one reason for insiders to buy — they think the stock is worth much more.

Right now, you can buy Enbridge at a discount of 19% or 24%, respectively, from the average and median prices that insiders recently bought the dividend stock at.

If this much insider buying is not a big buy signal for investors like you and me who’ve been watching the dividend stock, I don’t know what is!

Notably, one insider, Enbridge Chief Legal Officer and Executive Vice President Robert Ross Rooney was responsible for buying 62% or over $1 million of the stock.

Rooney strategically stretched the purchases across five transactions to net an average price of $43.95 per share at writing.

Stock market crash 2020 doesn’t look like it will end anytime soon, however. So, it would be in investors’ best interests to average into their positions over time.

Although insiders are bullish on the stock, the short-term stock price movements are controlled by the emotional market rather than not the long-term fundamentals of the strong company.

Stock market crash 2020: Why Enbridge remains a safe dividend stock

The stock market crash of 2020 is scarier than the other crashes because it’s a flash crash with no bottom in sight. The backdrop is the COVID-19 pandemic that countries around the world are fighting. In the meantime, the pandemic is bringing global economies to a halt.

Take a deep breath and rest easy with Enbridge stock in your portfolio.

Although the outlook of the energy environment looks gloomy, let’s not forget that nearly half of Enbridge’s EBITDA is from natural gas transmission, distribution, and storage, and power and other assets. These are necessity products and services.

Additionally, there is a high level of defensiveness in Enbridge’s EBITDA, of which 98% of which is backed by long-term contracts and 95% are from investment-grade counterparties. Its cash flow therefore has little commodity price risk and is relatively stable.

Furthermore, the company highlighted that its top 20 customers, which are 90% refiners and integrated producers, represent 86% of its liquids pipeline revenue.

The Foolish bottom line

The stock market crash has pulled down Enbridge stock to a basement bargain price! This price is meaningfully lower than the massive insider buying of $1.7 million worth of Enbridge stock in February and March so far.

This is a big buy signal!

Right now, you can buy Enbridge at a tremendous discount for a dividend yield of about 9%. What are you waiting for?

Want more value stocks? Check these out.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kay Ng owns shares of Enbridge. The Motley Fool owns shares of and recommends Enbridge.

More on Dividend Stocks

a person prepares to fight by taping their knuckles
Dividend Stocks

TFSA Investors: 2 High-Yield Heavyweights Worth a Sizeable Investment

SmartCentres REIT (TSX:SRU.UN) and another high-yield heavyweight to buy now while rates and fears remain high.

Read more »

Growing plant shoots on coins
Dividend Stocks

Buy These 3 High-Yield Stocks With Healthy Payout Ratios

The payout ratio is a good way to understand a dividend-paying company’s financial stability, and it’s a good way to…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Your Guide to the Best Monthly Dividend Stocks in Canada

Three of the best monthly dividend stocks in Canada have market-beating returns despite the elevated volatility in 2023.

Read more »

data analyze research
Dividend Stocks

Passive Income: How to Earn $1,191/ Per Year Tax Free

Make $1,191/year in tax-free passive income with these top TSX dividend stocks.

Read more »

Senior couple at the lake having a picnic
Dividend Stocks

3 Under-$30 Stocks That Pay Over a 5% Dividend Yield

These three dividend stocks below $30 could boost your passive income.

Read more »

grow money, wealth build
Dividend Stocks

2 Small-Cap Growth Stocks Worth Adding to Your Arsenal

While large-cap, blue-chip stocks make for the safest investments, there are plenty of small-cap growth stocks that offer safe and…

Read more »

A worker gives a business presentation.
Dividend Stocks

3 Blue-Chip Stocks to Hold Tight in a Fluctuating Market

These three Canadian blue-chip stocks can be good investments to hold in a volatile market to protect your self-directed investment…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

$25,000 in This Dividend Stock Pays You $1,920 a Year

Enbridge stock offers you a dividend yield of 7.7%, making it a top choice for income-seeking investors in 2023.

Read more »