Enbridge Inc. (ENB) is one of the largest energy infrastructure companies in North America. It operates an extensive network of pipelines, natural gas distribution utilities and renewable power generation, explains Gordon Pape, editor of The Income Investor.
Earlier this month, the company said it has successfully completed the three-year strategic plan it set out following the acquisition of Spectra Energy in early 2017. Management said the focus is now on maintaining and expanding three core businesses: Liquids Pipelines, Gas Transmission, and Gas Distribution and Storage.
To that end, the company announced it has signed a letter of agreement with Enterprise Products Partners L.P. (EPD) to jointly develop the U.S. Gulf Coast deep-water oil terminal capable of fully loading Very Large Crude Carriers (VLCC).
Enbridge also announced that it will advance the development of a new wholly owned Jones Creek Crude Oil Storage Terminal. The terminal will have ultimate capacity of up to 15 million barrels of storage.
It will have access to crude oil from all major North American production basins and will be fully integrated with the Seaway Pipeline system to allow for access to Houston-area refineries, existing export facilities, and other facilities in the future.
The company provided updated guidance for earnings before interest, taxes, depreciation and amortization (EBITDA) for 2020 of approximately $13.7 billion. Distributable cash flow per share for 2020 is forecast to be between $4.50 to $4.80.
In December, Enbridge announced a 9.8% increase in its dividend, to $0.81 per quarter ($3.24 per year), effective March 1. The company has raised its dividend every year since 1995. The increased dividend will boost the forward yield on the stock to 6.4%.
After three years of problems absorbing the Spectra integration, Enbridge now seems to be on track. We should look forward to a gradual increase in the stock price and more years of dividend increases in the 10% range. Action now: Buy.
