Here's Why You Should Hold on to Enbridge (ENB) Stock Now
Enbridge Inc. ENB has gained 10.4% in the past three months compared with the industry’s 8.4% growth.
The Zacks Consensus Estimate for ENB’s 2023 and 2024 earnings per share (EPS) is pegged at $2.02 and $2.10, respectively.
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What’s Favoring the Stock?
Geographical Reach
Enbridge's distinction of having the longest and most advanced crude oil and liquids pipeline system in the world is a significant feat in the energy transportation sector. The 17,809-mile network covers significant parts of North America. This extensive reach enables Enbridge to connect major oil supply basins with key markets and refineries, facilitating the efficient transportation of crude oil and liquid hydrocarbons.
Diverse and Stable Business Portfolio
Enbridge’s business is diversified across natural gas, liquids and renewable energy sectors, with a balanced EBITDA mix of approximately 50% from natural gas and renewables, and 50% from liquids. This diversification ensures stability and resilience against market fluctuations.
Strategic Acquisitions and Growth Initiatives
ENB has achieved advancements through strategic acquisitions, notably in the gas utilities sector, establishing itself as the foremost natural gas utility platform in North America. These acquisitions are anticipated to bolster earnings and foster growth opportunities. Enbridge is currently the only major pipeline company in North America that owns a regulated gas utility.
Commitment to Sustainable Practices and ESG Goals
Enbridge targets achieving net-zero emissions by 2050, focusing on reducing operational GHG emissions. ENB continues to focus on emission reduction, social responsibility and diversity, aligning with global ESG leadership trends. This commitment is likely to appeal to socially conscious investors.
Robust Capital Allocation and Dividend Growth
The company has a consistent record of sustainable capital allocation and dividend growth, supported by predictable cash flows. Over the majority of the last five years, ENB consistently yielded higher dividends than its sector counterparts. This record reflects the company’s commitment to delivering value to investors through reliable and competitive dividend payouts, making ENB an attractive choice for those seeking income-oriented investments in the energy sector.
Outlook and Industry Trends
ENB is strategically positioned to benefit from industry trends, such as increasing demand for renewable energy and natural gas. The company's involvement in renewable energy projects and natural gas distribution is likely to drive growth.
These factors suggest that Enbridge is well-positioned for sustained growth, making it an attractive option for investors seeking stability and growth potential in the energy sector.
Risks
Compared to composite stocks belonging to the industry, the Zacks Rank #3 (Hold) company’s balance sheet has more debt exposure. Moreover, the leading midstream energy player’s bottom line is affected by increasing gas distribution costs.
Stocks to Consider
Investors interested in the energy sector might look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Imperial Oil Limited’s IMO integrated business portfolio of upstream and downstream assets provides it with a high level of stability, reducing the risk profile.
Imperial Oil remains strongly committed to returning money to investors via dividends. The company's board of directors recently approved a hike in the quarterly dividend payment. The new payout of 50 Canadian cents is 14% above the prior dividend. Further, adhering to the company's long-standing obligation to its shareholders, Imperial Oil revised its existing share purchase policy to buy up to 5% of outstanding common shares.
Murphy USA’s MUSA unique high-volume and low-cost business model helps it retain high profitability, even in the fiercely competitive retail environment.
MUSA remains committed to returning excess cash to its shareholders through continued share buyback programs. As part of this initiative, the fuel retailer recently approved a repurchase authorization of up to $1.5 billion, following the completion of the existing $1-billion mandate. The move underscores MUSA’s sound financial position and commitment to rewarding its shareholders.
Sunoco LP SUN is among the biggest motor fuel distributors in the U.S. wholesale market in terms of volumes. The Zacks Consensus Estimate for SUN’s 2023 and 2024 earnings per share is pegged at $5.19 and $3.83, respectively.
Sunoco has a core competency in terms of its history of disciplined expense management. Over the past few years, the company has demonstrated a remarkable ability to control total operating expenses, with an annual growth rate of only around 2% since 2019.
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Sunoco LP (SUN) : Free Stock Analysis Report
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Enbridge Inc (ENB) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
