Enbridge vs Energy Transfer: Wall Street Loves One, One Analyst Doesn't
Energy Transfer draws 19 of 21 analyst buy ratings and a 6.3% yield, but Enbridge's 31-year dividend streak wins one analyst's preference. Alpha Score 58 for ENB.
A Motley Fool analysis highlights a sharp split in sentiment toward two North American midstream giants. Wall Street overwhelmingly favors Energy Transfer (NYSE: ET), with 19 of 21 analysts rating it a buy or strong buy. But one prominent contributor, Reuben Gregg Brewer, prefers Enbridge (NYSE: ENB) for its dividend consistency.
Energy Transfer yields 6.3%, backed by distribution coverage of 2.2 times. Enbridge yields 5.8%, roughly half a percentage point lower. The gap alone would boost a $10,000 income stream by about 9% annually if an investor chose Energy Transfer. Yet Brewer points to dividend history as the deciding factor.
Enbridge has raised its dividend annually for 31 consecutive years. Energy Transfer cut its distribution in 2020 during the pandemic, a move Brewer said was probably the right business decision but hit unitholders at a bad time. The distribution has since recovered and now sits above its pre-cut level. Brewer also cited a 1996 episode in which Energy Transfer agreed to buy Williams (NYSE: WMB) and then attempted to scuttle the deal by issuing convertibles that appeared to protect insiders from a dividend cut. The transaction fell through, and the convertibles never took effect, but Brewer said it raised “material trust issues.”
Brewer holds a position in Enbridge and does not own Energy Transfer. He called himself willing to “accept a lower yield” for the assurance of a consistent payout. Energy Transfer’s changes in recent years may earn it a second chance from other investors, he wrote.
Enbridge carries an Alpha Score of 58, labeled Moderate, from AlphaScala’s proprietary model. Its stock page provides further detail on the company’s positioning.
Energy Transfer’s coverage and yield remain attractive to the analyst consensus. The question for dividend investors is whether the added income compensates for the historical risks Brewer highlighted. Enbridge offers a longer track record, while Energy Transfer offers a stronger current yield and stronger buy-side support.
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