Enbridge, Inc Declares 10% Quarterly Dividend Amount Hike for First-Quarter 2020 Distribution (NYSE:ENB)
By: Ned Piplovic,
Enbridge, Inc. (NYSE:ENB) — a Canadian crude oil and natural gas transportation company — extended its streak of consecutive annual dividend hikes by announcing a 10% increase to its quarterly dividend payout amount for the first-quarter 2020 distribution.
This most recent dividend hike declaration marks the company’s 20th consecutive annual boost. In addition to raising its quarterly dividend payout at least once per year over the past two decades, Enbridge has been distributing a portion of its earnings as dividend payouts for the past 65 years.
Over the past two decades of consecutive hikes, the company has managed to maintain an average annual dividend growth rate of more than 12%. Additionally, while the growth rates tend to decline as the base increases, Enbridge’s average annual growth rate is still 11.7% over the past five years.
However, while Enbridge managed to maintain the steady and robust dividend payout growth for decades, the company’s share price experienced some headwinds in the aftermath of oil prices decline after the 2014 peak levels. Just between April and December 2015, the share price lost almost 45% of its value and fell to just 22 cents above the $30 level. After recovering half of those losses by September 2016, the share price reversed direction again and by April 2018 fell to its nine-year low below $30.
While experiencing moderate volatility, the share price has been riding an overall uptrend since early 2018, and half of Wall Street analysts covering the stock have a “Buy” or “Strong Buy” recommendation. The analysts’ current average target price is $45.03. Therefore, the Enbridge share price has more than 15% room on the upside before it reaches this average target price.
A mid-year share price pullback in 2018 dropped the 50-day moving average below its 200-day equivalent. However, the share price has been rising steadily and with minimal volatility since August, which pushed the 50-day average back above the 200-day moving average in mid-November. The 50-day average continued to rise since mid-November and currently stands nearly 3% above its 200-day equivalent. Additionally, the share price has been trading steadily above both moving averages since mid-October.
As always, investors interested in taking advantage of this current uptrend should complete their own detailed stock analysis and due diligence before making any investment decisions. Income investors have a little more time to decide whether the Enbridge stock warrants consideration. To ensure eligibility for the next round of dividend distributions on the March 1, 2020, pay date, investors must claim stock ownership before the February 13, 2020, ex-dividend date.
Enbridge, Inc. (NYSE:ENB)
Headquartered in Calgary, Canada, and founded in 1949 as the Interprovincial Pipeline Company, Enbridge Inc. operates as an energy infrastructure company in Canada and the United States. The company manages and has an 84.6% economic interest in the Enbridge Income Fund (NYSE:ENF), a 34.9% economic interest in Enbridge Energy Partners L.P. (NYSE EEP) and a 75.0% equity interest in Spectra Energy Partners, LP (NYSE:SEP). Enbridge is Canada’s largest natural gas distribution provider, with nearly 4 million retail customers in Ontario, Quebec, New Brunswick and New York State. Additionally, Enbridge operates the world’s longest crude oil and liquids transportation system, with more than 17,000 miles of active pipe and an average delivery quota almost 3 million barrels of crude oil each day. Also, Enbridge transports almost 30% of the crude oil produced in North America and more than 20% of natural gas consumed in the U.S. The company owns and operates more than 65,000 miles of gathering lines, more than 25,500 miles of transmission lines, and more than 100,000 miles of distribution lines of natural gas and natural gas liquids (NGL) pipelines across North America and the Gulf of Mexico.
The share price entered the trailing 12-month period on the tail end of a 23% decline driven by the overall market correction in fourth-quarter 2018. After dropping almost 3% in less than two weeks, the share price hit its 52 week-low of $29.22 on December 24, 2018. However, the share price recovered those losses by the second week on January 2019. Despite a mid-year pullback of nearly 15%, the share price gained almost 33% over its 52-week low to reach its new 52-week high of $38.80 on December 9, 2019. At the end of the following trading session, the share price closed slightly lower at $38.65. While 0.4% below the peak from one day earlier, the Dec. 10 closing price was 2.4% higher than it was one year earlier, as well as 32% above the 52-week low from late-December 2018.
The declared 10% boost raised the quarterly dividend payout from the current $0.56 (CAD 0.738) distribution to the $0.614 (CAD 0.81) first-quarter 2020 payout. This new quarterly dividend payout amount corresponds to a $2.46 (CAD 3.24) annualized distribution and a 6.36% forward dividend yield. While slightly below the 7.96% yield average of the Oil & Gas Pipelines industry segment, Enbridge’s current yield is 11.5% higher than the company’s own $5.7% average yield over the last five years. Furthermore, the current yield outperformed the 3.82% simple average yield of Enbridge’s peers in the Basic Materials sector by more than 65%.
The share price decline in 2015 overpowered five years of rising quarterly dividend distributions to deliver a 4% total loss. While the trend reversal and recovery narrowed the impact of asset depreciation, the share price loss still offset half of the dividend payouts over the past three years. Still, the sum of the quarterly dividend distributions still delivered a three-year total return of 6.5%. However, with continued capital gains, the share price complemented the quarterly dividend income in the last year and contributed nearly a quarter of the 8.3% total return over the trailing 12 months.
Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.
In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.