Enbridge Inc. (NYSE:ENB) is anticipating an increase in core earnings for 2024 and has accordingly raised its dividend outlook for the same year, banking on a surge in demand that is expected to boost volumes transported through its network.
The optimistic outlook is grounded in the expected rise in demand, supported by the ongoing trend of increasing profits in the Canadian oil and gas transportation sector. This sector’s profitability is believed to stem from reduced U.S. inventory levels and a notable shift in exports towards alternatives to Russian oil, prompted by Russia’s invasion of Ukraine.
Enbridge foresees an 8% uptick in drilling activities by Canadian oil and gas producers in 2024, a development anticipated to drive pipeline utilization. The company projects a core profit of C$9.3 billion from its liquids pipeline business, the primary unit of the company, benefiting from robust system utilization.
For the year 2024, Enbridge expects to deploy C$6 billion in capital, covering maintenance expenditure. The company envisions adjusted core earnings ranging from C$16.6 billion to C$17.2 billion, surpassing its 2023 expectations of C$15.9 billion to C$16.5 billion.
Enbridge has strategically positioned itself for sustained growth, securing an additional $7 billion in organic projects since the beginning of the year. This expansion has elevated the secured backlog to $25 billion, with an additional boost of over $3 billion from highly strategic and accretive tuck-in acquisitions.
In line with this positive financial outlook, the company has announced a 3.1% increase in the dividend for 2024. Enbridge will pay out a quarterly dividend of 91.5 cents per share, effective from the dividend payable on March 1, 2024. This marks the 29th consecutive annual dividend increase for the company.
Additionally, Enbridge, having proposed a $14 billion bid to acquire three utilities, has confirmed securing funding for more than 75% of the total purchase price. If successful, the deal would not only double the company’s gas distribution business but also establish North America’s largest natural gas provider.
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