With the woes of the public health crisis almost gone, surging economic activity around the globe have led to a new set of issues. Rising inflation has spurred the need for higher interest rates. This has hurt growth stocks disproportionately, with investors looking to energy names like Enbridge (TSX: ENB)(NYSE: ENB) stock for refuge.
While Enbridge stock may not necessarily fall neatly into the “value stock” bucket, I think this is a stock worth considering. Despite a rather impressive increase in Enbridge’s share price over the past year, this is a company with excellent fundamentals and forward-looking prospects.
Here’s more on why I think Enbridge stock could be one of the most attractive energy plays in the market right now.
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Enbridge stock provides high-yield value
First of all, Enbridge really isn’t an energy stock. This company is an energy infrastructure company, providing a number of pipelines transporting oil and gas across North America. This business model provides extremely attractive, stable cash flows over time.
Enbridge has proven to be one of the most consistent dividend-growth stocks on the market. Much of this has to do with the company’s business model. Indeed, Enbridge’s current dividend yield of 5.9% is attractive on its own. However, considering the fact this company has raised its distribution significantly over time, investors who lock in this yield today are likely to get inflation-resistant income. That’s a good thing, considering the environment we’re in.
Additionally, the company’s valuation multiple of only 20 times earnings is very attractive in this light. Investors are starting to see the value pipeline operators provide. Thus, in combination with the company’s strong fundamentals, its financials, and dividend yield, there’s a lot to like about where Enbridge stock is trading.
Top energy giant focusing on renewable portfolio expansion
Additionally, Enbridge isn’t only a pipeline company. Indeed, this is Enbridge’s core business. The company provides a vast pipeline network that handles roughly one-fifth of all the crude oil consumed in the United States. Overall, Enbridge’s pipelines transport roughly 25% of the North American crude oil produced. That’s significant.
However, the company has been increasingly shifting its focus to renewable energy. Within the lens of ESG, this is a smart move. And investors have started to take notice.
One such recent move has been an intriguing partnership with Waste Connections (TSX: WCN)(NYSE: WCN) to convert landfill gases to green energy. This project aims to reduce pollution while lowering dependency on non-renewable energy. Additionally, this project is expected to reduce over 110,000 tonnes of greenhouse emission and produce enough energy to hear around 18,000 homes.
This is just one of the many renewable energy projects that Enbridge has been working on lately as a part of its plan to focus on clean energy.
Final word
Enbridge stock is on that simply ticks many of the boxes most long-term investors want. This is a company with excellent fundamentals and cash flows, supporting a high yield. Over time, Enbridge has proven to be an excellent long-term pick for investors seeking stability.
Accordingly, Enbridge stock remains a top pick of mine in this uncertain environment.
