Is Enbridge a Great Dividend Stock?
What should you look for in a dividend stock? Not only do you want an attractive, growing stream of regular income, but you also want your hard-earned money to be safe. Given the way energy stocks are trading, investors have rightly become skeptical about their prospects. A lot of smaller, leveraged names are struggling to survive and several have gone bust. However, there are companies with diversified operations that have sustainable growth paths. Let's see why Enbridge (NYSE: ENB) is one of them.
Enbridge generates its earnings from its vast and diversified midstream assets. While its liquids pipelines segment is the main revenue generator, earnings from regulated gas transmission and distribution operations provide a layer of stability when liquids earnings fall. This happened in the latest quarter. Lower oil prices and volumes caused a 5% drop in Enbridge's liquids pipelines segment. However, its gas distribution and storage earnings soared due to higher rates and new customers. Overall, Enbridge's adjusted earnings fell by $163 million Canadian dollars to CA$961 million for the quarter, mainly driven by lower liquids volumes and lower differentials-based earnings in its energy services segment.
Still, the company expects to meet its full-year distributable cash flow guidance range for 2020. Enbridge could achieve it, thanks to its predominantly resilient earnings and cost savings in response to the COVID-19 pandemic.
Source Fool.com
