Where Will Enbridge Stock Be in 5 Years? 

Enbridge (TSX:ENB) stock is trading near the upper end of its $45-$60 range amid a seasonal rally. This pipeline stock sees strong demand for oil and gas in the winter as demand for heating increases. The company released an optimistic guidance for 2025 and announced a 3% dividend hike. While the business is going as usual in 2024, how will it be in the next five years?

The U.S. tariff challenge

U.S. president-elect Donald Trump has threatened to impose a 25% tariff on Canadian imports. Canada imports almost 99% of its oil and gas production to the United States through Enbridge and other pipeline operators. While Enbridge did not mention the impact of a tariff on its guidance, the company already has a Plan B for the United States. It has acquired three gas utility companies in the United States, and the earnings from this are unlikely to be affected by potential tariffs.

Enbridge’s 2025 guidance

Assuming there is no tariff, Enbridge expects its earnings before interest, taxes, depreciation, and amortization (EBITDA) to rise 9% in 2025 and 7-9% in 2026. It expects its earnings per share to rise 4-6% and distributable cash flow (DCF) to rise 3% in 2025. The guidance includes accretive earnings from the recent acquisition of three U.S. gas utilities.

The higher EBITDA will help Enbridge sustain its targeted debt-to-EBITDA margin of 4.5-5.0.

Enbridge: 2026 and beyond

Enbridge is silent about the possible impact of a 25% tariff on Canadian imports, but the tariff, if implemented, will affect the company’s growth prospects. Enbridge is eyeing the liquified natural gas (LNG) export opportunity to European countries, which could partially offset changes in U.S. tariffs in the medium term.

Enbridge’s cash flow could accelerate as more projects come online and its exposure to LNG exports increases. The company could keep its previous long-term guidance of accelerating its dividend growth to 5% beyond 2026.

The growing shift towards LNG and renewables, the North American LNG export opportunity, and new U.S. gas utilities could drive Enbridge’s growth in the next five years. However, the stock price will likely remain range-bound. Hence, it is better to wait for the share price to fall below $55 to buy Enbridge stock. That way, you can lock in a 7% dividend yield.

How will your money grow with Enbridge in the next five years?

Enbridge is a Dividend Aristocrat and largely gives returns through dividends. If you bought the stock at the dip of around $40-$45, it is a good time to sell some shares at its five-year high of $59 per share and book profit. The last time stock reached closer to the $59 price was in June 2022 when the Russia-Ukraine war inflated oil prices. You could consider buying Enbridge stock when it falls below $55 in February and lock in a 7% yield. For every 14 shares you sell at $59, you can buy one share at $55.

Suppose you purchased 182 shares for $10,000 at $55 per share; you can sell them for $10,738. You can use the $738 capital gain to buy 13 more shares of Enbridge at $55/share and earn $49 in annual dividends from these 13 shares. If you invest through the Tax-Free Savings Account (TFSA), you need not worry about capital gain tax.  

Enbridge has paused its dividend-reinvestment plan (DRIP), which means you will only get dividend growth of 3% in the first two years and likely 5% in the next three years.

If you don’t own Enbridge stock, you could consider investing $10,000 when the stock price falls to $55 or lower. It will buy you 182 shares of Enbridge, which will give you a $686 annual dividend in four quarterly investments. This dividend could grow to $818 in the next five years, assuming there is no major economic crisis.

Key takeaway

The low-risk business model of Enbridge makes its returns predictable even amid uncertain times. While it is an evergreen stock you could consider buying at any price point, you can maximize your returns by buying it at the lower range of $45.