Enbridge (TSX:ENB)(NYSE:ENB) remains one of the most highly recommended companies to buy on the TSX today. Yet even with many moving towards the company, Enbridge stock remains a cheap stock to consider these days.
That’s for multiple reasons. For those seeking a long-term investment, Enbridge stock is one of the top choices as it transitions to clean energy, while remaining a cash cow. And with today’s valuations in the mix, Motley Fool investors should consider this stock.
The number one energy stock
There are several reasons Enbridge stock is the number one energy stock. First, it’s in the pipeline industry. This industry alone offers stable income for Motley Fool investors. Rather than depend on oil and gas prices, it has long-term contracts serving up stable cash.
Furthermore, Enbridge stock continues to build pipelines across North America for new income as well. Oil and gas will continue to be the primary source of energy for the next few decades. So during that time, it will continue to ship the commodities to where it needs to go.
Finally, it’s the largest Canadian pipeline company by market capitalization. Today, it has a market cap of $105 billion. That’s nearly double the second place market cap position.
Strong even during a pandemic
The downturn Enbridge stock received wasn’t due to the pandemic, but from the 2018 crash in oil and gas. The glut caused pipelines to stop shipping out the commodity. This hurt Enbridge stock far more than the market crash.
When the crash hit, Enbridge stock fell to a point that it was far beyond being just a cheap stock. Instead, it climbed and climbed. Today, shares are up 27% since that fall, working back towards all-time highs.
As we get closer to the company’s earnings report, we get closer to all-time highs just shy of $65 per share. That would be a potential upside of 25% as of writing. And with revenue continuing to come in strong, it’s likely Motley Fool investors will see another earnings boost. Especially as oil and gas rebound as well.
The dividend hikes
Now the main reason that I would continue to recommend Enbridge stock is the company’s dividend. That dividend has grown at a compound annual growth rate (CAGR) of 14.32% over the last decade. Today, you can pick up a yield of 6.44%! That comes after Enbridge boosted the dividend to $3.34 per share.
Furthermore, this is a company that is a dividend aristocrat, with decades of solid dividend payments. So you can look forward to earning that dividend for years to come.
The opportunity of a lifetime?
The fundamentals! Enbridge stock has all of these benefits, yet remains of incredible value at this point. On the eve of a potential earnings boost, Enbridge stock is a cheap stock with a 17.34 price-to-earnings ratio. Furthermore, it has a 12.46 EV/EBITDA and 1.93 price-to-book ratio. This all points towards stability and strong payments and share growth in the future.
If you had purchased this cheap stock a decade ago, a $20,000 investment would be worth $28,888. But if you had reinvested your dividends, that number goes much higher.
