Enbridge Inc. (ENB) is an energy distribution and transportation company that owns and operates crude and natural gas pipelines across the United States and Canada. It also operates a gas utility business. Additionally, the company has considerable exposure to renewable energy through a diversified portfolio of renewable energy projects.

Founded in 1949, Enbridge is now an $83 billion (by market cap) energy juggernaut that employs more than 11,000 people. The company has five business segments: Energy Services, 47% of FY 2020 revenue; Liquids Pipelines, 27%; Gas Transmission and Midstream, 13%; Gas Distribution, 12%; and Renewable Power Distribution, 2%. By merging with Spectra Energy Corp. in 2017, Enbridge became the largest energy infrastructure company in North America. Enbridge operates the world’s longest and most complex crude oil and liquids transportation system. To give you some perspective on that system, their pipeline network stretches from Norman Wells, Canada to Brownsville, Texas. They operate over 17,000 miles of active crude pipeline across North America, split nearly evenly between the US and Canada. The company has increased its dividend for 25 consecutive years.

A great look made even greater by the 10-year dividend growth rate of 11.3%. I always love to see a double-digit long-term dividend growth rate. But I especially love it when the yield is this high. The stock yields 6.6%. That’s five times higher than the broader market’s yield. It’s also 90 basis points higher than the stock’s own five-year average yield. You will almost never see a yield this high paired with a growth rate this high. And the dividend is secured by a payout ratio of 68.9%, based on midpoint guidance for this fiscal year’s DCF/share. These dividend metrics are out of this world. Morningstar rates ENB as a 3-star stock, with a fair value estimate of $44.00. CFRA is another professional analysis firm, and I like to compare my valuation opinion to theirs to see if I’m out of line. They similarly rate stocks on a 1-5 star scale, with 1 star meaning a stock is a strong sell and 5 stars meaning a stock is a strong buy. 3 stars is a hold. CFRA rates ENB as a 3-star “HOLD”, with a 12-month target price of $44.00. I came out high, which surprises me. Averaging the three numbers out gives us a final valuation of $47.74, which would indicate the stock is possibly 18% undervalued.

Bottom line: Enbridge Inc. (ENB) is the largest energy infrastructure company in North America. Its operational resiliency and dividend reliability are rare in this industry. With a 6.6% yield, 25 consecutive years of dividend increases, a reasonable payout ratio, double-digit long-term dividend growth, and the potential that shares are 18% undervalued, this is a compelling long-term idea for yield-seeking dividend growth investors.

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