ENBRIDGE INC. (Toronto symbol ENB; www.enbridge.com) gets 90% of its revenue from pipelines that pump oil and gas from western Canada to eastern Canada and the U.S. The remaining 10% mainly comes from distributing gas to 2 million consumers in Ontario, Quebec and parts of New York State. Enbridge is spending $27 billion on expansion projects between 2012 and 2016. This excludes the controversial $5.5-billion Northern Gateway pipeline. This $5.5-billion project would pump crude from Alberta’s oil sands to Kitimat, B.C. From there, tankers would ship the oil to customers in Asia. However, growing opposition from environmentalists and First Nations will probably prompt regulators to reject the project. The company’s plans do include a $6.2-billion plan to build pipelines and rail links to move oil from the Bakken region of North Dakota and Saskatchewan, as well as $5.8 billion of new lines to pump more oil from western Canada to the Gulf Coast. [ofie_ad] Enbridge is also spending $5.8 billion on its Gulf Coast Access Program, which will pump more crude oil from western Canada through a major oil storage facility in Patoka, Illinois, to refineries on the U.S. Gulf Coast. In addition, Enbridge is spending $2.7 billion to expand its existing pipelines in eastern Canada and parts of the U.S. These upgrades will help the company take advantage of rising production from Alberta’s oil sands and the Bakken area.
Dividend stocks: Enbridge has raised dividend continuously since 1996
Enbridge has paid dividends since it became a public company in 1953, and has raised its payout each year since 1996. Its current annual rate of $1.26 a share yields 2.7%. The stock now trades at 25.6 times Enbridge’s likely 2013 earnings of $1.82 a share. The company’s new projects should increase its earnings to $2.10 a share in 2014. In the latest issue of Canadian Wealth Advisor, we look at whether Enbridge will be able to sustain its current rate of growth and continue raising its dividend. We conclude with our clear buy-hold-sell advice on the stock. COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members Pipelines have become a controversial topic in the past few years, especially TransCanada’s Keystone XL pipeline through the U.S. midwest and Enbridge’s Northern Gateway project. What is your opinion on the debate over pipelines? Let us know what you think?
