The idea of finding value stocks in today’s market is perhaps much different than most of the past decade. Valuations have become bloated, leaving few companies in the “value” bucket for investors.
That said, there are a number of companies with reasonable valuations providing excellent yield in this environment. Two of the companies I’ve been pounding the table on for some time are Enbridge (TSX:ENB)(NYSE:ENB) and Fortis (TSX:FTS)(NYSE:FTS).
Let’s dive into why these companies may be the value stocks investors don’t want to miss right now.
Top value stocks to buy: Enbridge
Enbridge transports 25% of North America’s oil and 20% of America’s gas. The company stands out among North America-based midstream operators with a utility-like earnings profile and focus on oil pipelines.
The company’s most important asset is its Mainline system, which controls more than 70% of the takeaway capacity of Canada. The midstream assets of Enbridge are the largest in North America and generate a stable and wide moat due to their irreplaceable and vital nature for the continent’s economy.
Last year was indeed a great one for Enbridge, and, irrespective of commodity prices, the company proved itself as an industry leader in stable growth.
If an investor had purchased $100 of this TSX stock two decades ago, it would be worth over $650 today, considering the stock’s most recent price. Over the last two decades, the company has outperformed the market by 2.68% on an annualized basis, thereby generating an average annual return of 9.78%.
Fortis
Fortis operates as an electric and gas utility firm in the United States, the Caribbean nations, and Canada. It generates, distributes and transmits electricity to roughly 438,000 retail customers in southeastern Arizona, along with 100,000 retail customers in the Mohave and Santa Cruz counties of Arizona.
This firm boasts an extended history of stable dividend payments. Since 2012, the first annual payment was valued at $1.16 in comparison to the latest full-year payment of $2.14. This represents that the organization increased its distributions at a yearly rate of roughly 6.3% over this period. The dividend has been seeing decent growth for many years, and shareholders have earned some juicy income in their portfolios.
Analysts remain bullish on Fortis moving forward, as do I. Indeed, as far as top-notch value stocks go, both companies provide excellent upside in this environment. For those looking to build a long-term portfolio, adding a mix of these two companies is an excellent choice in this environment, in my view.
