Have you looked at Enbridge’s stock price recently? (TSE banknote symbol: ENB).
Why am I saying you should buy or accumulate more ENB stock right now?
What makes me feel this way?
In this article I will try to explain exactly why.
Please don’t think this article is a random thought, I have my reasons for you to consider Enbridge as a good long term investment.
Let’s get started.
Why should you buy Enbridge stock today?
Here’s a quick look at Enbridge’s stock as of today.
The screenshot above is the one-year trading chart for Enbridge stock. The fundamentals of the business are fantastic. Enbridge is a large Canadian company.
As you can see in the screenshot above, the stock which was trading near 60 levels is down near $37.30. It’s very cheap.
The second reason is that Enbridge is one of the best blue chip companies in Canada with a fantastic dividend yield of almost 9% that no high interest account can match, even with promotions.
If that’s not enough to convince you, Enbridge has been paying consistent dividends for 65 years.
Here’s a quick note from the Enbridge website on their history dividend payments:
Enbridge has been paying dividends to its shareholders for over 65 years.
This translates to a dividend of $3.24 per share on an annualized basis for 2020. Over the past 25 years, the dividend has grown at an average compound annual growth rate of 11%.
Currently, the dividend stands at $3.24 per year. But there you go, you don’t need to wait a full year to receive the dividends, you will be paid once every 3 months or 4 times a year.
Alright, let’s do some quick math to help you understand better.
Let’s say you have $1,000 to park somewhere or invest.
You have two options:
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Leave it in your savings or checking account and earn at the maximum interest rate of 2% (even with a HISA account)
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Or second, invest in ENB stocks.
Option 1 is still there. It’s safe and good.
Let’s talk a little more about option 2 here (Investing in Enbridge Stock)
So, with the $1,000 you have, starting today you can buy:
$1,000/37.30 (Enbridge stock price as of today). You will end up buying 27 shares of the company.
Right now, each of these 27 stocks will pay you $3.24 per share. This represents $87.48 CAD per year.
Now let’s divide $87.48/12 (monthly) = $7.29 per month or you will be paid $21.87 every 3 months.
So for the $1,000 you invest in ENB, you will receive a dividend of $22 every 3 months.
Some other things to consider when buying Enbridge stock today
1. First, Enbridge has been increasing the dividend percentage for 65 years in a row at an average compound rate of 11% per year. So the dividend of $3.24 per year (this year) is only for this year.
Next year, dividends are expected to increase further. Isn’t it exciting that your money makes even more money with each passing year.
2. Also don’t forget the growth of the stock, if the stock eventually climbs back to the $50 levels, that represents a massive return of almost 30% on your capital.
3. If you are worried that the stock will continue to fall, remember that you are still investing with these blue chip stocks for the long term, and over the long term, Enbridge is a clear winner. It’s not a penny stock, come on!
4. Try to always buy stocks like ENB when going down (when the stock price goes down you will end up buying more shares and when the stock is high you still buy the stock but you will get less quality, this way you will dollar average and end up becoming a winner over time). It also helps you avoid FOMO. Invest the same amount every month and buy on red days. If that helps!
For example – Let’s say for example you have $1,000 to invest every month, right. And you want to invest $200 in Enbridge every month. That’s it, you have a plan now, remember to stay consistent month after month and I bet you will accumulate a lot of wealth over time.
Consistency is the key to success here and create a cash flow plan with your bank’s investment account (I know for sure CIBC does this) so that your $1,000 goes into that account every month 🙂
Set a particular date for your investments to take place and that’s it. Congratulations, you are on the right track.
Last words
Enbridge is a fantastic company and a true value in Canada.
The stock is down right now, but that’s for now. I’m pretty sure the stock will perform well in the long run. By long term, I mean a minimum of 5 to 10 years of investment.
Always remember to choose good quality blue chip stocks. When stocks are cheap and have good fundamentals, buy more if possible. Ultimately, you need to think long term to build wealth and avoid getting into penny stocks.
I’m not a financial advisor to recommend anything. But, in the best interest possible, I try to help people with what I consider good to secure their future.
Financial education and where to park your money is very important. You still need to understand what to do with your money. If you don’t, you won’t get much.
Thanks for reading. Let me know your thoughts and comments below.
