Energy infrastructure company Enbridge (NYSE:ENB) (TSE:ENB) is well-positioned to comfortably extend its 29-year streak of dividend growth. The company’s leadership increased its near-term EBITDA outlook and sees a sustained expansion in both distributable cash flow (DCF) and earnings, which positions it well to cover its payouts and further increase dividends.
Enbridge, which transports oil and gas, has raised its dividends at a CAGR of 10% in the past 29 years. Moreover, it has been distributing dividends for over 69 years.
Enbridge Extends Guidance
Enbridge’s management has extended its annual growth guidance until 2026. The company expects its adjusted EBITDA to increase at a CAGR of 7%-9% through 2026, up from its previous forecast of 6% for 2024. It expects its EPS to experience a CAGR of 4%-6% during the same timeframe, while its DCF per share is projected to grow at a CAGR of approximately 3%. Beyond 2026, Enbridge foresees adjusted EBITDA, EPS, and DCF per share, expanding by 5% annually.
The company said that the increase in EBITDA growth rate reflects benefits from its recent acquisitions, which are likely to close in 2024. Furthermore, the strength in its base business, cost optimization, and a solid backlog of growth projects are expected to support its EBITDA and earnings, which will allow it to offer higher dividend payments.
Enbridge announced new capital investments to bolster growth, including expanding export docks and storage tanks at the Enbridge Ingleside Energy Center (EIEC) terminal and establishing connections for Shell’s Sparta assets off the coast of Louisiana. These strategic investments will support its growth and lay the groundwork for future expansion through valuable partnerships and organic opportunities.
What is the Prediction for Enbridge Stock?
The visibility over Enbridge’s future EBITDA and earnings, solid dividend payment history, compelling yield of over 7.65%, and secured backlog of $25 billion worth of growth projects support its bull case. However, ENB stock trades at a premium compared to its peers, noted Stifel Nicolaus analyst Cole Pereira on February 13. This explains why analysts are sidelined on ENB stock.
It has four Buy, five Hold, and two Sell recommendations for a Hold consensus rating. ENB stock has been roughly flat over the past year. Meanwhile, analysts’ average price target of $36.63 implies 4.51% upside potential from current levels.
