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Enbridge (ENB) to Streamline Asset, Hike Dividend, Lower Debt

Zacks

Enbridge Inc. ENB plans to focus on more profitable businesses as well as lowering debt burden. This leading midstream energy firm also revealed ways to fund growth projects and announced intention to reward shareholders with dividend hike.

Following the merger with midstream player Spectra Energy on Feb 27, Enbridge created the largest energy infrastructure company in North America. Now, Enbridge intends to streamline its portfolio by spending as much as C$22 billion on growth and maintenance developments through 2020-end. While majority of the capital budget – C$14 billion – will likely be funded by internally generated cash, Enbridge will finance C$3 billion through the sale of non-core assets and C$1.5 billion through equity capital – by issuing common stocks.

Investors should know that Enbridge has figured out C$10 billion worth of non-core assets. Of the total, the company expects to monetize at least C$3 billion in 2018 through the divestment of some unregulated natural gas midstream assets and onshore renewable operations.

Moreover, with an aim to lower its debt burden by C$4 billion, the company is planning to improve the credit matric by achieving a Debt to EBITDA multiple of 5x and 4.5x by the end of 2018 and 2020, respectively.

Enbridge also received an approval from the board of directors to bump up its quarterly dividend. The new dividend of 67.1 Canadian cents, represents a sequential increase of 10%, will likely be paid on Mar 1, 2018, to stockholders of record as of Feb 15, 2018.

For 2018, Enbridge is expected to provide annual dividend growth of 10%. Also, through 2020, the company is planning to reward shareholders with the same dividend growth.

Headquartered in Calgary, Canada, Enbridge is an energy infrastructure company. The company’s pricing chart fails to impress. Year to date, the stock has lost 15.4%, underperforming the industry’s 6.6% decline.


Presently, Enbridge carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy space are China Petroleum & Chemical Corporation SNP, Northern Oil and Gas, Inc. NOG and ExxonMobil Corporation XOM. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Beijing, China Petroleum is a leading integrated energy player. The company will likely witness year-over-year earnings growth of 59.1% in 2017.

Based in Minnetonka, MN, Northern Oil is an upstream energy player. The company’s 2017 revenues are estimated to grow almost 44%.

Headquartered in Irving, TX, ExxonMobil is the largest publicly traded energy firm. The company managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 8.81%.

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