Enbridge (ENB +0.02%) is one of North America's largest energy infrastructure companies. It transports about 30% of the crude oil produced on the continent and almost 20% of the natural gas consumed in the U.S. The Canadian company also operates the largest natural gas utility by volume and is a leading investor in renewable energy.
Here's a look at what this leading pipeline and utility stock has done for investors over the past five years.
Image source: Getty Images.
Drilling down into Enbridge's five-year return
The following table illustrates Enbridge's stock price and total return compared to the S&P 500 over the past one-, three-, and five-year periods:
|
One-year |
Three-year |
Five-year | |
|---|---|---|---|
|
Enbridge |
12.7% |
21.9% |
39.9% |
|
Enbridge (total return with reinvested dividends) |
19.4% |
48.7% |
94.4% |
|
S&P 500 |
12.4% |
73.8% |
86.6% |
Data source: Ycharts.
Other than the past year, Enbridge's stock price has underperformed the S&P 500 over the last three- and five-year periods. However, the company's total return is much higher when adding in its high-yielding dividend (5.8% current yield). That lucrative dividend income has really added up over the past five years, enabling Enbridge to outperform the broader market index.
NYSE: ENB
Key Data Points
What has fueled Enbridge's returns?
Enbridge has spent the past several years expanding and diversifying its North American energy infrastructure platform. It has invested heavily in organic capital projects across its four core franchises (liquids pipelines, gas transmission, gas distribution, and power). It has expanded several oil pipelines, built new natural gas pipelines, invested in gas utility capital projects, and developed several renewable energy projects, including offshore wind energy projects in Europe.
The company has also made several acquisitions over the past few years. The biggest was its transformational deal to buy three U.S. natural gas utilities from Dominion for $14 billion in 2023. That transaction significantly expanded its gas distribution platform, further shifting its earnings mix away from liquids pipelines:
| Franchise |
Earnings percentage before the Dominion acquisitions |
Earnings percentage after the Dominion acquisitions |
|---|---|---|
|
Liquids Pipelines |
57% |
50% |
|
Gas Transmission |
28% |
25% |
|
Gas Distribution |
12% |
22% |
|
Renewable Power |
3% |
3% |
Data source: Enbridge.
Enbridge's investments have enabled it to grow its earnings, cash flow per share, and dividends at low-to-mid single-digit compound annual rates over the past five years. That earnings growth, combined with the company's high-yielding and steadily rising dividend (it recently extended its dividend growth streak to 31 consecutive years), helped fuel its market-beating total return over the past five years.
Slow and steady can win the race
Enbridge isn't the fastest-growing company. However, it has done well for investors by growing its earnings at a modest pace, which has allowed the company to steadily increase its high-yielding dividend. That combination of income and growth has really added up over the past five years, giving Enbridge the fuel to produce a market-beating total return.
