Top Picks 2018: Enbridge (ENB)

01/16/2018 5:00 am EST

Focus: ENERGY

Gordon Pape

Editor and Publisher, The Income Investor and the Internet Wealth Builder

Enbridge Inc. (ENB) — our top conservative idea for 2018 — has always been a highly dependable utility stock, with steady annual dividend increases and a gradual gain in share price, suggests Gordon Pape, editor of Internet Wealth Builder.

However,  the company — a Canada-based firm focused on energy transportation, distribution and generation — took a hit in 2017 after completing the purchase of Houston’s Spectra Energy in February.

Investors became concerned about the stock dilution that flowed from the deal, the doubling of the company’s long -term debt, and disappointing financial results. The stock fell from a high of $44.52 in late January to a low of $34.39 in November.

The company responded by raising its dividend by 10%, effective next February, and announcing asset sales and the issuing of new shares to strengthen the balance sheet. The stock bounced back but is still well below its 52-week high.

With a yield of 5.4%, Enbridge, which trades on both the NYSE and the Toronto exchange, offers excellent cash flow and modest capital gains potential for conservative investors.

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