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Enbridge is focused on rewarding its shareholders and sports an attractive 3.5% dividend yield. The company is confident that it can grow free cash flow by double-digit rates over the next several years, which should mean that more dividend hikes are on the way.
Third Quarter Results
Enbridge posted third quarter earnings per share of 52 cents, beating the Zacks Consensus Estimate by 6 cents.
Total revenues increased 33.2% year-over-year. Liquids pipelines revenues surged 34.5%, while natural gas delivery and services revenue jumped 33.9%.
Income from operations improved a stellar 34.9% year-over-year.
CEO Patrick Daniel stated in the third quarter earnings release that the company is on track to achieve full year EPS in the upper half of its guidance of $2.50 to $2.70.
The Zacks Consensus Estimate for 2010 is toward the upper end of the range at $2.67. This represents 22% EPS growth over 2009. The 2011 estimate is currently $2.84, or 6% higher than the 2010 consensus estimate. It is a Zacks #2 Rank (Buy) stock.
ENB sports an attractive 3.5% dividend yield. The company believes it can grow free cash flow at 18% per year over the next several years which would allow the company to continue raising its dividend.
Its payout ratio is 66%, roughly in-line with the industry average.
Shares are trading at 20.6x forward earnings, a slight discount to the industry average of 21.1x. Its price to sales ratio of 1.5 is also below the peer group of 2.0.
Enbridge Inc operates the largest crude oil and liquids pipeline system in the world. It is also a leader in natural gas distribution.
The company is based in Calgary, Alberta, Canada and has a market cap of $20.6 billion.
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Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.
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