Wednesday, March 24, 2010

First Trade Enbridge Inc.

I've added 100 shares of Enbridge as the first holding in this portfolio. I believe a utility pipeline company is a one of the most basic building block of a dividend portfolio.

Enbridge has a gas distribution network, and some power generation assets. I use enbridge gas at my home and my rental properties. the residential distribution network component is a natural monopoly.

The most hilarious thing I find about them is the equal billing plan where they offer to even out your bill for you over the year. and is the default setting for new accounts. so customers are forced to save month with them at 0% intrest, then if they are late to pay a bill then get charged 1% intrest a month, even though enbridge has money saved up for you. in your plan.

I believe enbridge is a good solid company in any canadian dividend portfolio and so I have added it as my first stock. it has low risk and highly visible earnings and capital investment plans.

and of course Enbridge pays an eligible dividend, which is what the dividend lover portfolio is all about

The CIBC analyst had this to say:
Enbridge continues to offer the strongest, most visible and lowest risk earnings growth, with 10% EPS growth expected to continue into the middle of the decade and beyond. We maintain our SO rating.

- Enbridge represents one of the best risk/reward situations in the Pipelines and Utilities sector.
- We expect 10%+ EPS growth through 2013, with comparatively low risk, driven largely by fully contracted pipelines already under construction, with negligible volume risk, and substantially mitigated capital cost risk. Growth is likely to continue thereafter as 2012+ project portfolio fills.
- Net free cash + dividends is expected to grow from $3.40/share in 2009 to $6.35 in 2013, which suggests that this stock could double over the next three years.
Sector:        Pipelines, Utilities, Power
Company:   Enbridge Inc.

Stock Rating: Sector Outperformer
Sector Weighting: Overweight
12-18 mo. Price Target $58.00
Dividend/Div Yield $1.70 / 3.6%
Book Value $18.86 per Shr

Earnings Per Share
2009 $2.34E $2.35A
2010 $2.59E $2.60E
2011 $2.89E $2.92E

2009 20.4x 20.3x
2010 18.4x 18.3x
2011 16.5x 16.3x

Dividend Per Share
2009 $1.48A
2010 $1.70E
2011 $1.88E

2009 3.1%
2010 3.6%
2011 4.0%

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