There aren’t as many battered dividend titans to buy on the way down these days, especially as investors become more than willing to pay up for performance. In any case, this piece will check in on two names that I think could be worthy buys at a time like this, when markets are running hot and some investors are concerned about the potential lack of relative value.
Without further ado, let’s get right into the names and determine whether they’re cheap enough to justify putting a bit of new money to work.
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Enbridge
Shares of Enbridge (TSX: ENB) recently came off all-time highs, but are now down just over 1%. It’s barely a bruise on the shares. That said, I still think any slight discount is worth treating as an opportunity to add to one’s position.
Of course, Enbridge isn’t nearly as bountiful as it used to be in the days when you could get a 6% dividend yield (or even a bit more) from the name. Today, the yield is 5.1%, which still stands out in an environment where it’s becoming harder to find yields above 4% on mega-cap market darlings, let alone ones north of 5%.
Either way, odds are you’ve already got exposure to the pipeline firm, but after a remarkable quarter and AI data centre tailwinds that I still think aren’t being talked about as much, I’m inclined to view the historically pricey stock as still a great buy, if not for the steady growth, perhaps for the still generous yield and the even more generous shareholder return program.
Perhaps the biggest reason to be open to paying a hefty multiple is that Enbridge stands out as a free cash flow-rich utility-eqsue kind of company with a high degree of predictability and AI-driven gas transmission upside that investors haven’t yet gotten all too euphoric over.
Personally, I’d rather pay for an earnings (and dividend) growth superstar than take a chance on a speculative neocloud AI data centre play or any one of the semiconductor stocks that’s made some investors euphoric. As more of big tech spend more on energy and the infrastructure required to keep the 24/7 data centres online, the more that firms like Enbridge start to get noticed.
Barrick Mining
For investors seeking a worse bruise, Barrick Mining (TSX: ABX) stock could be the bargain play now that investors have moved on from gold, silver, and its miners. The stock tanked nearly 6% to end last week due to the drop in precious metals prices.
Now down 23%, the bear is very much in control. But if you’re looking for a dividend grower that stands to benefit from the long-term debasement trade in addition to a rise in operating efficiencies, I think Barrick at 11.3 times trailing P/E is a pretty great deal. Barrick may very well be the most productive (in terms of yield) way to play gold, and I’m a fan of the name while it’s out of favour since the positive drivers of gold still look in play. As the weak hands move on from gold, I’d look to premier miners, like Barrick, for a source of upside torque.
