Is Now the Right Time to Buy Enbridge Stock? Here’s My Take

Here’s why Enbridge (TSX:ENB) could be the most reliable dividend stock you can buy in April 2024.

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Enbridge (TSX:ENB) is arguably one of the most reliable dividend-paying stocks in Canada. Besides other fundamental factors, the Canadian energy infrastructure giant’s solid dividend-growth track record makes it a top pick for income investors. Remarkably, ENB stock has been rewarding its investors with attractive dividends for nearly seven decades and has raised its annual dividend payouts for 29 consecutive years.

But is now the right time to buy ENB stock? Let’s take a closer look at some main reasons that could influence your decision in April 2024.

Buy Enbridge amid ongoing macroeconomic uncertainties

The Canadian stock market is currently at its highest level in history as the S&P/TSX Composite benchmark trades with solid 6.7% year-to-date gains due mainly to high expectations that the central banks in the United States and Canada will soon start slashing interest rates.

However, the possibility that persistent inflationary pressures will force central banks to delay interest rate cuts can’t be ruled out completely. Considering that, the stock market may still remain highly volatile, which could pose a risk for investors seeking stability and steady income. That’s why dividend stocks like Enbridge could be a very attractive option for long-term investors who want to weather the market turbulence and enjoy reliable cash flows.

If you don’t know it already, Enbridge is one of North America’s largest energy infrastructure companies, with a huge network of liquids and gas pipelines and energy storage facilities. The company transports roughly 30% of the crude oil and 20% of the natural gas consumed in North America, making it a large essential service provider for the energy sector.

Even as several other energy giants have faced the heat of the global pandemic and other macroeconomic challenges in the last few years, Enbridge’s bottom line has steadily grown. In the last five years, the company’s total revenue witnessed a 6% decline from $46.4 billion in 2018 to $43.6 billion in 2023. Despite lower revenues, its adjusted annual earnings during the same period have gone up by around 5% from $2.65 per share in 2018 to $2.79 per share in 2023.

To add optimism, ENB’s adjusted net profit margin has also expanded significantly in the last five years from 9.8% to 13.2%, reflecting the company’s ability to increase its operational efficiency and reduce costs.

Besides these positive factors, Enbridge’s growing footprints in North America, this crude oil export, and renewable energy segments further brighten its long-term growth outlook.

Lock in ENB stock’s high yield in April 2024

Enbridge’s highly reliable business model allows it to generate stable and predictable cash flows from its long-term contracts and regulated assets, which help it keep rewarding investors with increasing dividends.

In 2023, weak prices of energy products and an energy sector-wide selloff took ENB stock down by about 10%. The stock hasn’t seen any notable change in 2024 so far, currently trading at $47.90 per share with a market cap of $101.8 billion, making it look undervalued.

The recent losses in its share prices, however, have made Enbridge’s dividend yield look even more attractive, which currently stands at 7.7% on an annualized basis. Given that, it could be the right time for investors to lock in ENB’s high yield by adding it to their long-term portfolio right now.

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.

The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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