Enbridge (TSX: ENB) stock has been on a downtrend after it peaked in June 2022 when oil prices jumped to US$125 on supply shocks from the Russia-Ukraine crisis. Many investors loyal to Enbridge were worried about the 25% dip in the stock price from its peak. There is one question on investors’ minds. Has Enbridge stock bottomed out, or is there more downside?
Is there more downside for Enbridge stock?
Enbridge has a diversified low-risk pipeline and utility-like earnings model that generates assured cashflows. Around 98% of its transmitted volumes are contractual, which ensures toll money flows through. The oil and gas transmission business is in full swing as the winter season boosts demand for natural gas. North America has even become Europe’s biggest liquified natural gas (LNG) supplier since it cut ties with Russia.
But fears of a recession still loom in America, and that could pull down demand for oil and gas. While Enbridge’s low-risk model can thrive in a recession, the stock market tends to react. Enbridge stock is still trading at its seasonal low, hovering at the lower end of the $43–$53 range. A recession could pull Enbridge stock below $40, as it did during the pandemic and 2018 slowdown.
Should you buy Enbridge stock now or wait till it bottoms out?
The answer depends on your investment objective. If you are looking to invest for your retirement, then Enbridge stock is a buy at any time. It is a golden opportunity to lock in a 7.5%-plus yield. The pipeline infrastructure it has built over the years can continue to earn cash flows for the next several decades.
One of the best ways to invest in Enbridge in the current market is to invest small amounts every month. If you invested $500 on the first trading day of every month since November 2022, today you would own 131 shares of Enbridge at an average price of $49.60.
| Month | ENB Stock Price | ENB Share count |
| Nov-22 | $52.62 | 9.00 |
| Dec-22 | $52.92 | 10.00 |
| Jan-23 | $54.48 | 9.00 |
| Feb-23 | $51.19 | 10.00 |
| Mar-23 | $51.53 | 10.00 |
| Apr-23 | $53.87 | 9.00 |
| May-23 | $47.79 | 10.00 |
| Jun-23 | $49.24 | 10.00 |
| Jul-23 | $48.48 | 10.00 |
| Aug-23 | $47.44 | 11.00 |
| Sep-23 | $45.05 | 11.00 |
| Oct-23 | $44.44 | 11.00 |
| Nov-23 | $46.26 | 11.00 |
Enbridge pays a $3.55 dividend per share, which means 131 shares can earn you $465 in annual dividends (average yield of 7%). As the stock is yet to bottom out, you can continue tapping this downward momentum and reduce your average cost per share.
Why invest in this stock?
Remember, no one can time when a share will bottom out. But you can move along with the market and take advantage of every moment that comes your way. Small joys make moments memorable in life, and small opportunities make returns stronger in the stock market.
The biggest profit and loss in the stock market is time. The more you delay investing, the more you lose. But the longer you stay invested, your investment returns outrun those who got the timing right and invested at the bottom and sold at the peak.
Enbridge is a company that has 68 years of dividend-paying history. It is strengthening its cash flow by investing in America’s three gas utilities. The debt will increase, but future rate cuts will reduce interest expense and boost earnings. That could leave more room for Enbridge to accelerate its dividend growth.
Invest today to lock in this future dividend growth.
