Enbridge Stock Down 3.5%: Is It Time to Buy Now?

3 min read | February 12, 2024 05:26 AM EST | By Team Kalkine Media

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Enbridge Stock Down 3.5%: Is It Time to Buy Now? — Image source: shutterstock

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Market analysts are optimistic about energy stocks in 2024, despite their sluggish start, including industry giant Enbridge (TSX:ENB), which is currently in negative territory at -3.50% year to date. However, despite this slow beginning, Enbridge remains a top pick for investors.

For many Enbridge investors, the primary focus lies on dividend income rather than price appreciation. Market analysts project a potential upside ranging from 16.5% to 34.7% from the current share price within one year. With the stock trading at $46.03 per share, the dividend yield stands at a substantial 7.95%.

TSX oil and gas stocks, including Enbridge, have been of particular interest to income-focused investors due to their historically generous dividend payouts. Enbridge's robust dividend yield further solidifies its appeal among investors seeking steady income streams in the oil and gas sector.

Investors looking for tax-efficient income may consider holding the stock in a Tax-Free Savings Account (TFSA) to benefit from tax-free income. Additionally, investing in a Registered Retirement Savings Plan (RRSP) can help reduce tax burdens, with deductions available on contributions made between March 2, 2023, and February 29, 2024.

Enbridge recently announced its fourth-quarter (Q4) and full-year 2023 earnings results, highlighting another year of robust safety, operational, and financial performance. Despite significant challenges, the $97.84 billion energy infrastructure company achieved its financial guidance for the 18th consecutive year.

According to Enbridge's president and CEO, Greg Ebel, the stable, low-risk, and diversified business is well-positioned for continued earnings and dividend growth. In 2023, adjusted EBITDA and earnings increased by 6.5% and 0.9% year over year, respectively. Distributable cash flow also rose by 2.59%, while the company marked 29 years of annual dividend increases.

Enbridge's future growth prospects are supported by a diverse and low-risk secured capital program worth approximately $24 billion. With a focus on expanding and modernizing infrastructure to drive growth and reduce emissions, the company aims to create long-term value for shareholders.

Furthermore, Enbridge's recent acquisition of East Ohio Gas Company, Questar Gas, and the Public Service Company from Dominion Energy presents a significant opportunity to enhance its natural gas utility franchise. Each acquired company is committed to achieving net-zero greenhouse gas emissions by 2050.

Overall, Enbridge has a track record of delivering stable returns and reliable dividend income. With the resurgence of energy stocks expected in 2024 due to heightened global energy demand, Enbridge is poised for potential capital appreciation and continued dividend growth, making it an attractive investment opportunity for investors seeking long-term value.

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