Enbridge (TSX:ENB) stock is among the most popular dividend stocks on the Toronto Stock Exchange. If you don’t know it already, the Calgary-based energy transportation and infrastructure giant has been rewarding investors with attractive dividends for about seven decades, which have also been rising for 29 consecutive years.
However, ENB’s share prices have been highly volatile in the last few years due mainly to the global pandemic-driven operational challenges and uncertain near-term outlook for energy products. But does that mean Enbridge’s upward trend is over? Is it too late to buy Enbridge stock now? In this article, I’ll try to answer these questions by analyzing Enbridge’s financial growth trends and fundamentals.
Analyzing Enbridge’s financial growth trends
When you’re thinking of investing in a stock for the long term, you should try to look at the long-term growth picture of that company’s financials. One of the key indicators of Enbridge’s financial growth is its earnings, which reflects how well the company is able to generate profits from its operations.
In the fourth quarter of 2023, Enbridge reported adjusted earnings grew positively by 1.6% YoY (year over year) to $0.64 per share. With this, the company’s adjusted earnings have gone up by around 5% from $2.65 per share in 2018 to $2.79 per share in 2023. Enbridge’s earnings growth for the last few years was driven mainly by higher volumes and utilization across its liquids pipelines, gas transmission, and distribution segments, as well as improved performance in its renewable power businesses. More importantly, its adjusted net profit margin in these five years has expanded from 9.8% in 2018 to 13.2% in 2023, reflecting the company’s ability to continue generating higher profits even in a challenging macroeconomic environment.
But despite these positive factors, ENB’s share prices have gone down by 7.3% in the last five years, making it look undervalued to buy now and hold the long term as it currently trades at $45.89 per share with a market cap of $97.5 billion.
Is it too late to buy Enbridge stock?
Now, let’s address the main question many might ask: Is it too late to buy Enbridge stock? Well, the answer to this question depends on your investment style and risk appetite.
If you’re looking to multiply your savings in a very short period of time, Enbridge might not be the best option for you. However, if you’re looking for a stable and reliable source of passive income from sustainable dividends, Enbridge might be a great choice for you. The fact that the company generates most of its profits from long-term contracts with high-quality customers reduces its exposure to commodity price fluctuations.
In addition, Enbridge has a decades-long track record of delivering reliable dividends, as I noted at the start of this article. The recent declines in its share prices have also made its annualized dividend yield even more attractive, which currently stands at around 8%.
Moreover, in recent years, Enbridge has increased its efforts to diversify its revenue streams further by expanding its presence in crude oil exports and renewable energy segments, which could pay off well over the long run and help its share prices steadily appreciate in value.
