Enbridge (TSX:ENB) just hit a new record high. Investors who missed the rally over the past two years are wondering if ENB stock is still attractive to buy right now for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term total returns.
Source: Getty Images
Enbridge share price
Enbridge trades near $77 per share at the time of writing. The stock is up about $30 per share in the past couple of years and has gained 20% in just the last 12 months.
Enbridge is a giant in the North American energy infrastructure industry with a current market capitalization near $168 billion. The company’s size gives it the financial firepower to make large strategic acquisitions to drive growth while still being able to invest significant capital in organic development projects.
Enbridge is widely known for its extensive oil and natural gas pipeline networks that move nearly a third of the oil produced in Canada and the United States and roughly 20% of the natural gas used by American homes and businesses. In recent years, however, Enbridge diversified its asset base to provide a more balanced revenue stream. Enbridge bought an oil export facility in Texas and is a partner on the Woodfibre liquified natural gas (LNG) export terminal being built in British Columbia. The company has also expanded its renewable energy division and became the largest operator of natural gas distribution utilities in North America after the acquisition of three gas utility businesses in the United States in 2024.
Enbridge is currently working on a $39 billion capital program that will help boost adjusted earnings per share and distributable cash flow by about 5% per year over the short term, beginning in 2027. This should enable the board to maintain steady dividend increases.
Enbridge raised the dividend in each of the past 30 years.
Risks
The stock fell from $59 in 2022 to $43 in 2023 when the Bank of Canada and the U.S. Federal Reserve aggressively raised interest rates to fight inflation. Enbridge uses debt to fund part of it growth program, so the jump in borrowing costs can put pressure on cash flow. Bond yields recently spiked on concerns that soaring oil prices will force the central banks to raise interest rates to keep inflation in check. If that scenario materializes, Enbridge’s share price could face new headwinds.
Opportunity
The combination of U.S. trade uncertainty and geopolitical unrest in the Middle East could lead to new oil and natural gas pipelines being built in Canada to enable the country to sell more production to international buyers. Enbridge’s size and expertise would make it a good candidate to participate in any new major projects.
Domestic natural gas demand is also expected to rise in the coming years as gas-fired power generation facilities are built to supply electricity to new AI data centres. Enbridge’s extensive natural gas transmission and distribution assets put it in a good position to benefit from the jump in natural gas usage.
The bottom line
Near-term volatility should be expected. The broader market is due for a pullback and Enbridge has had a big run. Investors who are more focused on capital gains might want to wait for a dip, or at least ease into a new position.
Income investors with a buy-and-hold strategy, however, should be comfortable owning ENB at this level. The stock provides a 5% yield at the current share price, so you get paid well to ride out some turbulence. Pullbacks would be an opportunity to add to the position.
