Can Enbridge Support Its Dividend?
Canadian midstream giant Enbridge (NYSE: ENB) has a 6.1% dividend yield, which is more than 4.5 times larger than what you'd get from an S&P 500 Index fund. High yields like this can be attractive to dividend investors, but they can also be a sign of a company that's facing material problems. So before buying this stock, it pays to step back and ask if Enbridge can support its dividend.
Enbridge, which has a huge portfolio of midstream assets spread across North America, is highly reliant on the demand for carbon fuels. To put some numbers on that, oil pipelines make up 54% of its adjusted EBITDA, and natural gas pipelines pitch in another 29%. It believes it holds the number-one and -two spots in these industries, respectively, by miles of pipe.
Although these operations are largely fee-based in nature, investors simply aren't fond of anything related to carbon fuels. There's good reason for that, too, given that the world is looking to move away from such energy options and toward renewable choices like solar and wind power.
Source Fool.com
