Shares of Enbridge (NYSE:ENB) came roaring back in January. After tumbling 20% in 2018 due in part to a late sell-off in the oil market, shares of the Canadian oil pipeline giant rebounded 17.8% last month, according to data provided by S&P Global Market Intelligence. Driving that rally was a bounce back in the oil market as well as some bullish notes by analysts who follow the company.
Crude oil snapped back nearly 18% in January as it began to rebound from a late-year sell-off that saw crude plunge 40% from its peak. The main factor driving oil higher was that inventory levels -- which climbed throughout the fourth quarter-- started falling again as an OPEC-led production cut began draining off some of that excess. That improvement in the oil market fueled an industrywide rally that boosted Enbridge's stock, even though Enbridge has minimal direct exposure to oil prices because long-term contracts underpin more than 95% of its earnings.
Aside from the oil price boost, Enbridge also got a lift from analysts. In early January, Wolfe Research upgraded the stock from peer perform to outperform, and Macquarie followed that up later in the month when it initiated coverage on the company with an outperform rating. Macquarie further noted that it prefers Enbridge over rival Canadian pipeline giant TransCanada (NYSE:TRP) because it has a "more palatable" leverage level after the company sold several assets last year to reduce debt. However, Macquarie stated that TransCanada and Enbridge have the best dividend track records and outlooks in the space, since both are on pace to grow earnings at a 10% annual rate through next year, which should support similar increases in their high-yielding dividends.
Check out the latest Enbridge earnings call transcript.
Even with last month's rebound, shares of Enbridge still trade at a discounted price compared to its peer group. Add that to the company's 5.9% yielding dividend, which it expects to increase by another 10% next year, and this pipeline stock remains an attractive option for income-seeking investors.