Enbridge Inc. ENB is a leading midstream energy player and generates stable cash flows, which enable it to return handsome capital to shareholders. Over the past three decades, the company has rewarded shareholders with consecutive dividend hikes. Now, can the trend continue?
Let’s analyze the company’s basic business model. Being a midstream player, Enbridge generates stable cash flows, since most of the company’s assets are booked by shippers for the long term. Hence, the company is not significantly vulnerable to volume and price risks. This stability enabled Enbridge to continue to reward shareholders.
Importantly, ENB also has a secured capital program of C$32 billion, comprising projects related to liquid pipelines, gas transmission, renewables and gas distribution & storage. Thus, Enbridge is likely to generate incremental cash flows and hence will continue to reward shareholders in the coming days. Currently, ENB’s dividend yield is 5.6%.
EPD & KMI Also Generate Stable Cash Flows
Enterprise Products Partners LP EPD and Kinder Morgan Inc. KMI are also leading midstream energy stocks. Both EPD and KMI generate stable cash flows and hence can reward their shareholders handsomely.
Currently, Enterprise Products’ distribution yield is 6.86%, while KMI’s dividend yield is 4.3%.
ENB’s Price Performance, Valuation & Estimates
Shares of ENB have gained 28% over the past year compared with the 24.3% improvement of the industry.
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From a valuation standpoint, ENB trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 15.61X. This is above the broader industry average of 13.97X.
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The Zacks Consensus Estimate for ENB’s 2025 earnings has not seen any revisions over the past seven days.
Image Source: Zacks Investment Research
Enbridge stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Enbridge Inc (ENB) : Free Stock Analysis Report
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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