ENB

Enbridge Inc

42.66
USD
0.95%
42.66
USD
0.95%
36.20 47.67
52 weeks
52 weeks

Mkt Cap 86.42B

Shares Out 2.03B

Chat
Send me real-time posts from this site at my email

Enbridge Has The Ability To Continue Providing Reliable Shareholder Returns

Enbridge (NYSE:ENB) has continued to outperform as the company is near 52-week highs. The company has an almost 6% dividend yield and an almost $100 billion enterprise value. The company has some of the most diverse and impressive midstream assets, and as we'll see throughout this article, that strength makes the company a valuable investment. Enbridge saw incredibly strong results in 1Q 2022 showing the company's portfolio strength. The company performed incredibly well in the first 3 months of the year, and remains on track to accomplish its 2022 guidance with a strong credit rating. The company is progressing on its capital program and expects $4 billion of capital to be put in service in 2022, most through the latter half of the year, supporting growth. The company has sanctioned $1 billion in growth projects YTD which means additional potential projects and capital spending in the upcoming years. The company's strong financial performance, in our view, supported by higher prices and strong operational performance, means that it could outperform its guidance for the year. Enbridge has a unique two-pronged strategy that highlights the company's continued commitment to growth. The two-prong strategy is focused on conventional growth and low-carbon growth. The majority of the company's EBITDA comes from traditional assets; however, renewable power now makes up 4% of EBITDA. The company's asset portfolio is incredibly strong and well distributed with numerous bolt-on opportunities. The company is looking at substantial low-carbon growth, such as with offshore wind pipelines, that will enable continued EBITDA growth across the board. We expect the company to continue modernizing and adding bolt-ons to its conventional assets while adding low-carbon assets. Enbridge Asset Portfolio Enbridge has a unique and massive asset portfolio, so we won't discuss it all, however, there are several aspects of the company's assets we want to talk to. Enbridge is building up a massive utility business supported by population growth in the Toronto Ontario area. The company has managed to add >40 thousand customers here and is advancing a substantial >$1 billion 2022 capital program here that includes the replacement of several other key assets for the company. Especially in Canada, where it's colder, and there's less renewable access, natural gas remains essential. The company has seen sanctioned expansions here which can support the build-up of an impressive utility business here. Another long-term reliable business that represents an industry that the company is entering is renewables. The company has visible growth for the next 4 years here and a massive 14 total projects in execution. The company's projects in construction total 1.6 gigawatts and the company has >3 gigawatts in advanced development. The company expects $1.2 billion to go into service in 2022 and sees gigawatts of additional opportunities. By 2026, we expect the company's EBITDA from renewables to hit double-digits, highlighting the rapid growth and scale of this opportunity. Enbridge is continuing to invest billions in growth as the company sees numerous opportunities from varying energy demands. The company has a $10 billion capital program, of which $2 billion has been spent to date. The company expects renewable power and new technologies to be one of the largest upcoming sources of its spending as it continues to look for growth and has numerous tie-in projects and various bolt on acquisitions for the company's expansion. It's worth noting with the majority of the company's capital allocation targeted towards 2022 it could always ramp up spending in upcoming years. We expect the company to continue earning steady returns from these assets. The company expects this growth will help support 5-7% annualized DCF/share growth. Enbridge Shareholder Return Potential Enbridge has the ability to drive massive shareholder returns for investors. The company expects to earn more than $15 billion in EBITDA for the year with 80% of that having inflation protection. The company has seen strong 1Q 2022 performance and expects that to continue for the company. The company's DCF/share guidance is for $5.35/SHARE in 2022, implying a 12% DCF yield for shareholders. The company's DCF is roughly $10 billion, implying manageable interest costs. The dividends cost it roughly $5-5.5 billion, which, after roughly $4 billion in capital, still leaves the company with $1-2 billion in DCF that it has yet to allocate. That's substantial cash flow after the company's respectable growth capital spending. Thesis Risk In our view, the largest risk for investors in Enbridge is regulation. The populace has consistently been moving against pipelines. While we view pipelines as essential and the protests increase the value of Enbridge's existing assets, they also make it harder for the company to undergo its growth plans, which could hurt shareholder returns. Conclusion Enbridge has some of the most unique assets in the midstream industry. The company is focused on consistently growing its revenue, and as a sign of its asset portfolio, the company is guiding towards roughly 5-7% in annualized EBITDA growth. That EBITDA growth comfortably covers the company's interest and supports continued returns. The company has numerous areas in which it can expand. Utility services and renewables are two of our favorites for the company, however, there are numerous opportunities across the board. Enbridge has an almost 6% dividend yield that we expect to continue growing, highlighting the company's value to shareholders who wait. The Energy Forum helps you invest in energy, generating strong income and returns from a volatile sector. Our included Income Portfolio helps you invest in the broader market, finding high-yield non sector-specific opportunities. Recommendations from a top 0.5% author on TipRanks! Worldwide energy demand is growing and you can be a part of this profitable trend. Plenty of unique under the radar opportunities remain. We provide: Model energy and market portfolios generating high-yield income. Deep-dive actionable research. Macroeconomic overviews. Summaries of recommendations and option strategies. Click for our 2-week trial, with 47% off! This article was written by The Value Portfolio focuses on deep analysis of a variety of companies with a primary focus on the energy sector. Occasional articles also focus on building a retirement portfolio or on other sectors (such as healthcare or technology). Legal Disclaimer (please read before subscribing to any services): Any related contributions to Seeking Alpha, or elsewhere on the web, are to be construed as personal opinion only and do NOT constitute investment advice. An investor should always conduct personal due diligence before initiating a position. Provided articles and comments should NEVER be construed as official business recommendations. In efforts to keep full transparency, related positions will be disclosed at the end of each article to the maximum extent practicable. The majority of trades are reported live on Twitter, but this cannot be guaranteed due to technical constraints. My premium service is a research and opinion subscription. No personalized investment advice will ever be given. I am not registered as an investment adviser, nor do I have any plans to pursue this path. No statements should be construed as anything but opinion, and the liability of all investment decisions reside with the individual. Investors should always do their own due diligence and fact check all research prior to making any investment decisions. Any direct engagements with readers should always be viewed as hypothetical examples or simple exchanges of opinion as nothing is ever classified as “advice” in any sense of the word. Disclosure: I/we have a beneficial long position in the shares of ENB either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue