Shares of Enbridge (TSX: ENB) are now widely owned by the average Canadian investor. If you’ve got exposure to a Canadian stock market index fund, odds are you’re invested enough. That said, if you’re a stock picker, I do think the case for overweighting into the $160 billion pipeline juggernaut is getting a bit stronger over time, and it’s not just about that fat 5.3% dividend yield, which remains quite bountiful, though quite a bit lower than in the recent past (yields closer to 6% were quite common over a year ago).
Indeed, Enbridge might not be the most exciting name to think about buying at a time like this, when semiconductor stocks are melting up, with some names going parabolic, while others seemingly go vertical.
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A dividend grower that’s flooring it!
It’s tempting to chase, but unless you’re willing to feel the pain of a proportional move in the opposite direction (a big plunge), I’d be a bit more comfortable going for some of the underrated value plays with huge dividends and very healthy dividend growth prospects. Enbridge fits the bill as a cheap dividend grower that might be worth checking out, even as shares look to consolidate after the latest upward move that began off the lows of January.
With Enbridge stepping up to the plate on Friday to deliver earnings, investors might have a chance to digest the results as they consider stepping in with a longer-term position, even as volatility looks to prevail. Undoubtedly, the stock spiked at Friday’s open, only to spend the rest of the day sinking, ultimately finishing the day down half a percentage point.
On the surface, it was a nice beat on the top- and bottom-line. Add a decent guide into the equation, as well as impressive backlog growth, and the quarter was one that would keep dividend growth investors sleeping well at night.
Enbridge’s quarter was solid despite the initial reaction
Even if the quarter was met with a muted, even slightly negative, reaction, I still think it’ll be tough to stop shares of ENB in their tracks. For the most part, the energy scene has been on the wrong side of the rotation back to the risk-on tech and AI stocks. And while the earnings still surpassed the low bar set by analysts, I do think that there are simply too many interesting things for investors to put their money to work in right now. Though I disagree with the intraday dip, I do think it’s a good thing for investors circling the name, seeking a decent entry point.
While I wouldn’t go as far as to say the earnings are coming for “free,” I do think that the current price of admission is quite decent, especially for long-term thinkers. The backlog is nothing short of encouraging and should help fuel big dividend growth well into the next decade.
The quarter wasn’t perfect, but, for the most part, the name probably should have gotten a shot in the arm. Though a breakout could be tough to time, I must say I like the name a whole lot better after the number than before.
