Is it a good company at a reasonable price? I am holding on to the share that I have and have no intentions of selling. I still think over the long term I will do well, but I think at present that they have a problem of not affording the dividend they are paying. I think that this will resolve itself in the future. I know that Simply Wall Street thinks it is undervalued. Analysts’ recommendations are all over the place. One analyst thinks the stock price will be rangebound for a while. However, the dividends yield is currently good. My testing is showing that the stock price is probably expensive. None of my tests are showing the stock as cheap.
I own this stock of Enbridge Inc (TSX-ENB, NYSE-ENB). I first bought this stock in 2005 and then bought more in 2008 and 2009. This stock was on the Dividend Achievers, the Dividend Aristocrats list and also on Mike Higgs’ list of Canadian Dividend Growth stocks. Enbridge is considered to be a low risk stock.
When I was updating my spreadsheet, I noticed that my total return to the end of February 2025 was 12.65% with 7.15% from capital gains and 5.50% from dividends. Currently the stock price is holding up well being down just 1% since the end of last year. There is a big difference in return for shares purchased 5 or 10 years ago. See paragraphs below.
If you had invested in this company in December 2014, for $1,015.58 you would have bought 17 shares at $59.74 per share. In December 2024, after 10 years you would have received $497.40 in dividends. The stock would be worth $1,037.17. Your total return would have been $1,534.57. This would be a total return of 4.93% per year with 12.56% from capital gain and 4.72% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $59.74 | $1,015.58 | 17 | 10 | $497.40 | $1,037.17 | $1,534.57 |
If you had invested in this company in December 2018, for $1,032.60 you would have bought 20 shares at $51.63 per share. In December 2024, after 5 years you would have received $351.49 in dividends. The stock would be worth $1,220.20. Your total return would have been $1,571.9*. This would be a total return of 9.63% per year with 3.40% from capital gain and 6.24% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $51.63 | $1,032.60 | 20 | 5 | $351.49 | $1,220.20 | $1,571.69 |
The current dividend yield is good with dividend growth low. The current dividend yield is good (5% and 6% ranges) at 6.13%. The 5 and 10 year median dividend yields are also good at 6.98% and 6.29%. The historical median dividend yield is moderate (2% to 4% ranges) at 3.73%. The dividend growth is low (below 8% per year) at 4.4% per year over the past 5 years. The last dividend increase was in 2025 and it was for 3%.
The Dividend Payout Ratios (DPR) are too high. The DPR for 2024 for Earnings per Share (EPS) is too high at 156% with 5 year coverage at 159%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is too high at 131% with 5 year coverage at 127%. The DPR for 2024 for Cash Flow per Share (CFPS) is too high at 75% with 5 year coverage at 75%. The DPR for 2024 for Free Cash Flow 1 (FCF 1) is too high at 125% with 5 year coverage at 133%. The DPR for 2024 for Free Cash Flow 2 (FCF 2) is too high at 118% with 5 year coverage at 114%. Analysts see the DPRs improving over the next few years, but they will still be in the too high range.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 156.41% | 159.39% |
| AEPS | 130.71% | 127.06% |
| CFPS | 75.12% | 75.46% |
| FCF 1 | 125.45% | 133.61% |
| FCF 2 | 118.00% | 114.10% |
Debt Ratios need to improve. The Long Term Debt/Market Cap Ratio for 2024 is fine at 0.70 and currently at 0.70. The Liquidity Ratio for 2024 is good at 1.55 and 1.50 currently. If you added in Cash Flow after dividends, the ratios are still too low at 0.75 and currently at 0.81. If you added back the current portion of the debt, the ratios are still too low at 1.11 and currently at 1.19. This ratio should be at 1.50 or higher. The Debt Ratio for 2024 is fine at 1.46 and 1.46 currently. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.18 and 2.18 and currently at 3.18 and 2.18. I prefer these ratios to be below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.70 | 0.70 |
| Intang/GW | 0.31 | 0.31 |
| Liquidity | 0.55 | 0.55 |
| Liq. + CF | 0.75 | 0.81 |
| Liq. + CF+D | 1.11 | 1.19 |
| Debt Ratio | 1.46 | 1.46 |
| Leverage | 3.18 | 3.18 |
| D/E Ratio | 2.18 | 2.18 |
The Total Return per year is shown below for years of 5 to 34 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 4.39% | 9.63% | 3.40% | 6.24% |
| 2014 | 10 | 10.09% | 4.93% | 0.21% | 4.72% |
| 2009 | 15 | 11.25% | 11.81% | 6.32% | 5.48% |
| 2004 | 20 | 10.96% | 12.41% | 7.29% | 5.12% |
| 1999 | 25 | 10.54% | 14.49% | 8.95% | 5.54% |
| 1994 | 30 | 9.36% | 16.21% | 9.93% | 6.28% |
| 1990 | 34 | 8.21% | 11.11% | 7.06% | 4.05% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 19.29, 22.81 and 26.34. The corresponding 10 year ratios are 20.33, 24.40 and 28.48. The corresponding historical ratios are 18.05, 19.35 and 23.62. The current ratio is 20.39 based on a stock price of $61.53, and EPS estimate for 2025 of $3.02. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 15.46, 18.85 and 21.19. The corresponding 10 year ratios are 16.06, 18.96 and 21.97. The current P/AEPS Ratio is 20.17 based on a stock price of $61.53 and AEPS estimate for 2025 of $3.05. The current ratio is between the median and high ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/Adjusted Funds from Operations Ratios are 8.12, 9.64 and 10.99. The corresponding 10 year ratios are 8.80, 10.19 and 11.35. The current P/AFFO Ratio is 10.70 based on a stock price of $61.53 and AFFO estimate for 2025 of $5.75. The current ratio is between the median and high ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $42.81. The 10-year low, median, and high median Price/Graham Price Ratios are 1.08, 1.26 and 1.48. The current P/GP Ratio is 1.44 based on a stock price of $61.53. The current ratio is between the median and high ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.88. The current ratio is 2.30 based on a Book Value of $58,153M, Book Value per Share of $26.70 and a stock price $61.53. The current ratio is 23% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2025 of $26.75. This analyst calculates the Book Value differently than I do, so here the 10 year median ratio is 1.65. With a stock price of $61.53, the ratio is 2.30 with a Book Value of $58,262M. The current ratio is 39% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 9.63. The current ratio is 9.42 based on a Cash Flow per Share estimate for 2025 of $6.53, Cash Flow of $14,229M and a stock price of $61.53. The current ratio is 2% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.73%. The current dividend yield is 6.13% based on dividends of $3.77 and a stock price of $61.53. The current ratio is 64% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 6.29%. The current dividend yield is 6.13% based on dividends of $3.77 and a stock price of $61.53. The current ratio is 2.5% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 2.05. The current ratio is 3.17 based on a stock price of $61.53, Revenue estimate for 2025 of $42,308M and Revenue per Share of $19.43. The current ratio is 55% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. I know that the dividend yield testing for the 10 year median yield is showing as reasonable and above the median and the historical one says that the stock price is cheap. However, you have to wonder if the company can currently afford the dividends that it is paying. The P/S Ratio test is saying that the stock price is relatively expensive and I am going with this. Most of the rest of the testing is saying that the stock price is reasonable but above the median.
When I look at analysts’ recommendations, I find Strong Buy (7), Buy (3), Hold (11) and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $64.42 with a high of $75.00 and low of $52.00. The consensus stock price of $64.42 implies a total return of $10.82% with 4.70% from capital gains and $6.13% from dividends based on a stock price of $61.53.
Analysts on Stock Chase mostly give it a buy, but there are a few descenders, and they think the stock will be rangebound for a while. Stock Chase gives it 5 stars out of 5. Rajiv Nanjapla on Motley Fool thinks this stock is an excellent buy for income-seeking investors. Puja Tayal on Motley Fool talks about possible effects of US tariffs. The company put out a Press Release about their fourth quarter of 2025 results.
Simply Wall Street via Yahoo Finance thinks that this stock is undervalued and its fair value is $92.23 CDN$. Simply Wall Street has two warnings out interest payments are not well covered by earnings; and dividend of 6.14% is not well covered by earnings or free cash flows.
Enbridge owns extensive midstream assets that transport hydrocarbons across the us and Canada. The firm has a small renewables portfolio primarily focused on onshore and offshore wind projects. Its web site is here Enbridge Inc.
The last stock I wrote about was about was H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF) … learn more. The next stock I will write about will be TransAlta Corp (TSX-TA, NSYE-TAC) … learn more on Monday, March 17, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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