World news – CA – 3 reasons why you should buy Enbridge (TSX: ENB) stock after the third quarter

The Motley Fool Canada »Distributed Shares» 3 Reasons To Buy Enbridge (TSX: ENB) Share After The Third Quarter

Sneha is a sculptor 9 November 2020 | More on: ENB ENB

Enbridge (TSX: ENB) (NYSE: ENB) once again reported strong quarterly numbers, reflecting the strength and resilience of its business despite challenges from weak demand and lower oil prices, the energy infrastructure giant reported rate before interest and tax Amortization and debt amortization of about $ 3 billion in the third quarter, which decreased slightly from the same period last year. Moreover, distributable cash flow remained strong at $ 2 billion 1 billion

Commenting on the third-quarter performance, Enbridge CEO Al Monaco said, “Each of our core businesses performed well in the third quarter. Usage levels in our gas transmission, gas distribution, storage, and renewable energy businesses remained strong and their strong business underpinnings continued to deliver strong business flows. Reliable cash reflects low risk utility business

With strength in its core business and ability to generate flexible cash flows, Enbridge has reiterated its 2020 forecast of discounted cash flow per share that Enbridge expects the DCF / share ratio to be in the middle of its pre-directed $ 4 range of 50 to 4 $ 80

While the third-quarter financial figures from Enbridge are impressive, I see three strong growth drivers that could support the recovery of its shares and boost shareholder returns

While the COVID-19 pandemic has affected Enbridge’s core productivity volumes, core business remains robust and has a high utilization rate. Enbridge’s gas transportation, gas distribution and storage and renewable energy businesses continue to deliver strong cash flow and support their business

Moreover, Enbridge benefits from its low-risk business that generates a benefit like projected cash flows, thanks to long-term contractual agreements, including receiving, payment or service cost arrangements.

With a slight rise in economic activities and a pickup in energy demand, Enbridge remains well positioned to deliver strong cash flows. Moreover, completing the guaranteed capital program is likely to result in 5-7% growth in DCF per share. / p>

Enbridge has a history of continuously boosting its shareholder returns through higher dividends. It has been paying dividends since its IPO in 1953. Moreover, its dividends have increased at an annual rate of about 14% over the past decade, which is commendable.

Last year, the company returned nearly $ 6 billion to its shareholders in the form of dividends. Moreover, it continues to pay its dividends regularly in 2020, despite the significant challenges of the pandemic as the COVID-19 pandemic has reduced Enbridge inventory, The dividend yield has increased to more than 9%, which makes it an attractive income stock

The diversified sources of the company’s cash flow, contractual arrangements, and focus on reducing costs indicate that its payments are safe. Moreover, with the improvement in its demand and guaranteed capital program, Enbridge can continue to increase its future earnings and enhance its shareholder returns

Enbridge stock is down about 27% year-to-date and looks attractive from a valuation point of view Enbridge stock is trading at the enterprise value for the next 12 months from a multiple of 10 to EBITDA8, which is roughly 14% below its historical average of 126. , The project value to future sales multiplying by 38 looks also attractive

Enbridge’s flexible business and low valuation are a good entry point for long-term investors. Moreover, strong dividends are likely to boost investor returns even more

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NYSE: ENB, Stock, TSX, Enbridge, Finance