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Enbridge Inc. raised its dividend and announced plans to buyback shares on Dec. 7, as the Canadian pipeline operator forecast higher core earnings in 2022 on rising demand for oil and gas.
Energy stocks have bounced back this year as investors are rewarding companies that are disciplined with their capital and as many North American energy firms are returning higher free cash flow to shareholders rather than investing in growth.
Pipeline operators have also benefited from shipping volumes that have recovered from the COVID-19 pandemic lows on the back of strengthening global demand for oil and gas.
Enbridge raised its quarterly dividend by 3% to 86 Canadian cents per share, effective March, and said it would buyback up to $1.5 billion of its outstanding shares.
The company also forecast 2022 EBITDA between C$15 billion and C$15.6 billion, higher than its 2021 expectations of C$13.9 billion to C$14.3 billion.
The company said it expects 2022 distributable cash flow per share of C$5.20 to C$5.50, about 9% to 10% higher than its 2021 guidance.
Enbridge expects to have C$5 billion to C$6 billion of annual investment capacity as part of its three-year plan, of which C$3 billion to C$4 billion is prioritized to be used for core low capital intensity and utility-like investments.
It also sanctioned C$1.1 billion of new capital projects, which is expected to drive EBITDA generation through 2024.
"We view the first glance at investor day as neutral with financial guidance roughly in-line and an equity returns plan that contemplates share repurchases with no commitment made today," analysts at Tudor, Pickering, Hold & Co. wrote in a note.
Enbridge, which set emission reduction targets last year, hopes to be a net zero emitter of greenhouse gases by 2050.
($1 = 1.2682 Canadian dollars)
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