) has hiked its quarterly cash dividend by 11% to 35 cents per
share from the prior payout of 31.5 cents. The increased dividend
will be paid on Mar 1, 2014, to stockholders of record as of Feb
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Enbridge's bullishness comes from its growth plan from new
projects contributing 10-12% average annual growth in earnings
per share through 2017. During the third quarter of 2013, the
company announced investments of approximately $4 billion in oil
sands infrastructure projects. The projects include the proposed
$1.4 billion Norlite Pipeline which will be capable of
transporting 270,000 barrels per day (bpd) of diluent from
Edmonton into the oil sands region as well as a $1.6 billion Wood
Buffalo pipeline extension. The Wood Buffalo pipeline extension
will transport as much as 490,000 bpd of diluted bitumen for the
proposed Fort Hills oil sands project. Overall, the company
expects to invest approximately $36 billion in projects during
the period 2013-17.
Canada-based Enbridge Inc. is a leading energy transportation and
distribution company. As a transporter of energy, Enbridge
operates the world's longest crude oil and liquids pipeline
system in Canada and the United States. The company is also
involved in natural gas transmission and midstream businesses in
other countries. As a distributor of energy, Enbridge owns and
operates Canada's largest natural gas distribution company. It
provides distribution services in Ontario, Quebec, New Brunswick
and New York State.
We remain apprehensive about the company's midstream natural gas
business, which is sensitive to changes in natural gas
supply-demand fundamentals and commodity cycles associated with
gas processing margins.
Enbridge carries a Zacks Rank #3 (Hold), implying that it is
expected to perform in line with the broader U.S. equity market
over the next 1 to 3 months.
Meanwhile, one can consider other stocks in the energy sector
that are expected to outperform in the near term. These include
Zacks Ranked #1 (Strong Buy) stocks of
Blueknight Energy Partners, L.P.
Matador Resources Co.
Abraxas Petroleum Corp.