Enbridge Inc. (ENB) has hiked its quarterly cash dividend by 11% to 35 cents per share from the prior payout of 31.5 cents. The increased dividend will be paid on Mar 1, 2014, to stockholders of record as of Feb 14, 2014.
Enbridge’s bullishness comes from its growth plan from new projects contributing 10–12% average annual growth in earnings per share through 2017. During the third quarter of 2013, the company announced investments of approximately $4 billion in oil sands infrastructure projects. The projects include the proposed $1.4 billion Norlite Pipeline which will be capable of transporting 270,000 barrels per day (bpd) of diluent from Edmonton into the oil sands region as well as a $1.6 billion Wood Buffalo pipeline extension. The Wood Buffalo pipeline extension will transport as much as 490,000 bpd of diluted bitumen for the proposed Fort Hills oil sands project. Overall, the company expects to invest approximately $36 billion in projects during the period 2013–17.
Canada-based Enbridge Inc. is a leading energy transportation and distribution company. As a transporter of energy, Enbridge operates the world's longest crude oil and liquids pipeline system in Canada and the United States. The company is also involved in natural gas transmission and midstream businesses in other countries. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company. It provides distribution services in Ontario, Quebec, New Brunswick and New York State.
We remain apprehensive about the company’s midstream natural gas business, which is sensitive to changes in natural gas supply-demand fundamentals and commodity cycles associated with gas processing margins.
Enbridge carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.
Meanwhile, one can consider other stocks in the energy sector that are expected to outperform in the near term. These include Zacks Ranked #1 (Strong Buy) stocks of Blueknight Energy Partners, L.P. (BKEP), Matador Resources Co. (MTDR) and Abraxas Petroleum Corp. (AXAS).
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