Enbridge Is a Rare Triple Threat

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The stock is down less than 1% on the news, but we see this as an overreaction. Despite the increase in purchase price, we don’t think the additional premium paid is material enough to change our valuation. Accordingly, we are maintaining our $49 (CAD 64) fair value estimate and wide moat rating.

We like the move, as it simplifies the Enbridge family into a single holding. After the Federal Energy Regulatory Commission issued its tax disallowance proposal in March, the master limited partnerships no longer serve the purpose they were created for: capital-raising vehicles for Enbridge.

We consider Enbridge a rare triple threat, boasting a wide moat, an attractive 6% dividend yield, and a cheap valuation. While the market continues to place too much emphasis on the dividend and overlook the impact that the growth portfolio will have on future cash flows and the balance sheet, the time is right for long-term investors to capitalize on the stock's considerable upside while collecting a steady stream of growing income.

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