We recently compiled a list of 12 Best International Dividend Stocks to Buy Now. Since Enbridge Inc. (NYSE:ENB) is part of the list, we have analyzed the stock in detail.
As we move toward the second half of 2024, investors are eagerly preparing for the direction that the stock market will take for the remainder of the year. The first quarter of 2024 marked the broader market’s strongest performance for the first quarter since 2019. However, the question remains whether this trend will persist throughout the year. With geopolitical tensions, high interest rates, and higher prices, investors are looking for ways to diversify their portfolios. In this regard, international stocks, which usually fly under the radar, are the most favorable option to explore. And they become even more appealing when they pay dividends.
Dividend stocks are the bread and butter of a diversified portfolio. They have represented nearly 34% of the market’s overall return from 1940 to 2023, with even better performance during periods of high inflation. American companies are mainly known for paying dividends, but foreign counterparts are not far behind in this regard. Expanding your portfolio globally could help you avoid some of the specific challenges faced in the US. For instance, European banks are subject to tighter regulations, resulting in lower levels of interest-rate risk. With a more relaxed regulatory environment, dividends could potentially increase, and buybacks might rise in the international market. In fact, the markets with the highest yields are Norway, Hungary, Romania, and Iceland.
In 2023, Europe played a significant role in driving growth, with record dividend payouts growing by 10.4% compared to the previous year on an underlying basis, according to a report by Janus Henderson. The report further mentioned that annual dividends for the region grew from nearly $169 billion in 2020 to $301 billion in 2023. The trend is expected to continue this year as well as corporate leaders, especially in Europe and Japan, appear to be striking a balance between investing in capital expenditures and meeting operating cash flow requirements, while also showing an inclination to return cash to shareholders through dividends. According to FactSet data, European dividends per share are expected to grow at a CAGR of 8.5% by 2025.
There are no certainties in investing, of course. But we have compiled a list of some of the best dividend stocks from the international market to offer exposure to our readers.
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Our Methodology:
For this list, we initially used a stock screener to identify foreign (non-U.S.) dividend stocks that are traded on US stock exchanges. Subsequently, from this dataset, we selected 12 stocks that boasted the highest number of hedge fund investors from Insider Monkey’s database of Q1 2024. The stocks presented in the article were then arranged in ascending order based on the count of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
6. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 32
Enbridge Inc. (NYSE:ENB) is a Canadian multinational pipeline energy company that transports oil and gas. The company pays an annual dividend of $3.66 per share, having recently increased it. Enbridge’s stock sports a yield of around 7%, which is quite high. As you must know, buying a stock solely because of a high dividend yield is never a good idea. Nonetheless, in case for Enbridge is also has a robust core business that suggests that the company will continue to generate enough cash to continue its payouts.
As Enbridge Inc. (NYSE:ENB) is generating most of its revenue from oil transportation, its stock price is correlated to oil prices, as lower oil prices mean less demand for oil transportation and less revenue for Enbridge, as a result. With oil prices range-bound for the past year, it’s unsurprising that Enbridge’s stock has barely moved. However, the company appears to take steps to diversify their business into renewable energy. However, this represents a tiny fraction of the company’s revenue (around $95 million in the first quarter). Overall, Enbridge Inc. (NYSE:ENB) reported revenue of $8.07 billion, which missed the consensus estimate by $862 million, while its EPS of $0.49 was lower than the expected $0.59 figure.
Enbridge Inc. (NYSE:ENB) plays an important role in the North American economy through its expanding energy infrastructure. The company transports approximately 30% of the total crude oil production in the region and around 20% of natural gas consumed in the US. This market share highlights the importance of Enbridge Inc.’s (NYSE:ENB) pipelines and facilities in supplying energy resources to the region. To further solidify its market presence, Enbridge Inc. (NYSE:ENB) has recently completed the acquisition of three companies from Dominion Energy for $14 billion. The three companies, EOG, Questar Gas, and the Public Service Company of North Carolina supply natural gas to roughly three million households and businesses and operate around 77,000 miles of pipelines.
The acquisition of Dominion assets do raise some concerns regarding the health of Enbridge’s balance sheet. The company had around $59 billion in long-term debt at the end of March and another $10.68 billion in current liabilities. On the other hand it ended the first quarter with $881 million in cash, $3.6 billion in trade receivables and unbilled revenues. Looking even further we can see that Enbridge Inc (NYSE:ENB) has a debt-to-EBITDA of 5.41, which does seem quite high. In this way, there is a high chance that Enbridge will focus on paying down its debt and might do so at the expense of further dividend hikes.
As of the end of March 2024, 32 hedge funds tracked by Insider Monkey hold stakes in Enbridge Inc. (NYSE:ENB), growing from 28 in the previous quarter. These stakes have a collective value of nearly $260 million. Ken Griffin’s Citadel Investment Group was bullish on the stock, boosting its stake in the company by 57% during the quarter.
Overall, ENB ranks 6th among the best international dividend stocks. You can visit 12 Best International Dividend Stocks to Buy Now to see other dividend stocks from the international market. While we acknowledge the potential of dividend stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
