Enbridge (TSX:ENB), the energy infrastructure giant, is not only a Canadian Dividend Aristocrat but arguably also one of the most reliable stocks in the energy sector. This Calgary-based energy infrastructure firm is well-known for its extensive portfolio of liquids pipelines and gas transmission networks across North America. After sliding about 10% in 2023, ENB stock has rallied 15% in 2024, currently trading at $54.60 per share with a market cap of $118.5 billion, outperforming the broader market. By comparison, the TSX Composite benchmark has gone up by 9.9% year to date.
But could Enbridge stock continue its upward trajectory over the next five years? In this article, I’ll talk about some important fundamental factors that could shape ENB stock’s performance in the coming years and find out what the future might hold for this Canadian energy firm.
Enbridge’s robust financial growth trends
Before picking up any stock to invest in for the long term, you must carefully analyze its financial health and growth trends. Over the decades, Enbridge has shown its ability to consistently grow revenue and earnings by adapting to changing market dynamics.
To give you a quick idea about its long-term financial growth trends, the company’s total revenue in the five years between 2018 and 2023 slipped by 6%. Despite lower revenues, Enbridge’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in these five years surged 28% from $12.8 billion in 2018 to $16.5 billion in 2023. Similarly, its adjusted EBITDA margin in these five years also expanded from just 27.7% to 37.7%, reflecting its remarkable operational efficiency and cost management strategies.
In the latest quarter ended in June 2024, Enbridge’s adjusted EBITDA rose 8.2% YoY (year over year) to $4.3 billion. Also, its quarterly distributable cash flow rose 3% to $2.9 billion. Notably, the energy infrastructure firm’s consistent focus on cash generation and efficiency has enabled it to raise dividends for 29 consecutive years. At the current market price, ENB stock offers an attractive 6.7% annualized dividend yield.
Where could Enbridge stock be five years from now?
While Enbridge’s strong presence in traditional energy is undeniable, its strategic ventures into crude oil export and renewable energy segments could redefine its market position in the years to come.
As countries across the world become more environmentally conscious and strive for a sustainable future, Enbridge’s investments in renewable energy sources stand to benefit from favourable regulatory environments and increased demand for clean energy solutions. Also, the company’s focus on expanding its presence in crude oil export could leverage its vast infrastructure and geographic advantage. Also, Enbridge’s sustainable and largely predictable cash flows give it the ability to continue investing in emerging market opportunities.
While it’s nearly impossible for anyone to predict exactly where ENB stock could be five years from now, I wouldn’t be surprised if these positive factors help this reliable Canadian stock to outperform the broader market by a wide margin over the next five years.
