Canadian Pipeline Operator Enbridge Announces Higher Dividends and 2025 Core Profit Guidance

On December 3, Enbridge Inc. (TSX: ENB) saw its stock price rise in pre-market trading after the Canadian pipeline operator released positive financial guidance for 2025. The company also announced an increase in its quarterly dividend for the upcoming year, citing expectations of strong oil and natural gas demand driving higher business volumes.

Dividend Increase

Starting March 1, 2024, Enbridge plans to raise its quarterly dividend from CAD 0.915 per share to CAD 0.9425 per share. The adjusted annualized dividend will total CAD 3.77 per share, equating to an annual dividend yield of approximately 6.2%, based on the company’s stock price as of December 2.

Key Financial Guidance

2024 Financial Outlook

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): Enbridge reaffirmed its 2024 guidance, estimating full-year EBITDA to approach the higher end of the CAD 17.7 billion to CAD 18.3 billion range.
• DCF (Distributable Cash Flow) per Share: The company expects to meet the midpoint of its earlier guidance for 2024.

2025 Financial Guidance

• Adjusted EBITDA: Projected at CAD 19.4 billion to CAD 20.0 billion, representing a 9% increase from the midpoint of Enbridge’s 2024 guidance. Analysts’ consensus stands at CAD 19.47 billion.
• DCF per Share: Forecasted at CAD 5.50 to CAD 5.90, equivalent to a total range of CAD 12.0 billion to CAD 12.9 billion.

Enbridge explained that its outlook is based on robust expected utilization across its business units and contributions from acquisitions and growth projects in 2024 and 2025. Notably, last year’s CAD 14 billion acquisition of three U.S. gas utility companies from Dominion Energy has significantly expanded its natural gas distribution segment. Additionally, ongoing growth projects worth around CAD 5 billion are expected to go into operation in 2024.

2023-2026 Growth Targets

Enbridge reiterated its medium-term financial growth outlook, including:

• EBITDA growth: 7% to 9% per year
• Adjusted EPS growth: 4% to 6% per year
• DCF per Share growth: Approximately 3% per year

For 2025, the company expects:

• Capital expenditures: Close to CAD 7 billion (excluding maintenance).
• Debt-to-EBITDA ratio: To remain between 4.5 and 5 times.
• Dividend payout ratio: DCF distribution to stay in the 60% to 70% range.

CEO’s Remarks

Enbridge’s President and CEO, Greg Ebel, emphasized that the company is well-positioned to align its investments with the increasing global demand for energy. He highlighted several key factors driving this growth, including a rebound in crude oil consumption to record highs, the expansion of liquefied natural gas (LNG), and growing global demand for natural gas, driven by coal-to-gas switching and rising electricity needs. These strong market trends are expected to support Enbridge’s continued business growth.

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