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Enbridge's Earnings Prove to be Completely Immune to the Market Turbulence – Motley Fool



While the second quarter was an abysmal one for the oil sector, it had a minimal effect on Enbridge‘s (NYSE:ENB) financial results thanks to its durable business model. The Canadian energy infrastructure giant remains on track to achieve its full-year forecast. Add that to its excellent financial profile and visible growth prospects, and the company’s 7.4%-yielding dividend is on rock-solid ground.

Drilling down into Enbridge’s second-quarter results


Q2 2020

Q2 2019

Year-Over-Year Change

Adjusted EBITDA

$3.312 billion

$3.208 billion


Distributable cash flow (DCF)

$2.437 billion

$2.310 billion


DCF per unit




Dividend payout ratio




Data source: Enbridge. NOTE: All figures in Canadian dollars. Current exchange rate CA$1 = US$0.75.

Enbridge generated impressive second-quarter results as its earnings and cash flow increased during a brutally challenging period for the energy sector. Powering its strong performance amid the storm was the overall durability of its diversified operations:

Data source: Enbridge.

Earnings from liquids pipelines dipped by about 1% due primarily to lower volumes because of the turbulent market conditions. However, the company offset much of this impact thanks to the strength of its contract profile.

Gas transmission and midstream earnings increased by 4% year over year. Fueling that growth were higher rates on its Texas Eastern system, the contribution of new assets, and a stronger U.S. dollar, which offset the sale of its Canadian gathering and processing assets.

Gas distribution and storage earnings also rose by about 4%. This business benefited from colder weather during the period, customer growth, higher rates, and cost savings.

Earnings from Enbridge’s renewable power business surged 50% year over year. Strong wind resource conditions in the U.S. and its recently completed offshore wind farms in Germany contributed to that increase.

Finally, energy services earnings dipped about 2% year over year as lower regional oil prices offset the company’s ability to capture storage opportunities.

An offshore wind farm.

Image source: Getty Images.

A look at what’s ahead for Enbridge

“In the face of the worst energy downturn our industry has ever experienced, the strength and resilience of our assets was demonstrated once again in the second quarter, with solid financial results,” stated CEO Al Monaco. Overall, Enbridge’s results exceeded its expectations for the quarter and the first half of the year. Now the company expects to achieve its full-year distributable cash flow guidance range of CA$4.50 to CA$4.80 per share ($3.37 to $3.59 per share) despite some headwinds it sees ahead for the second half.

Enbridge also made excellent progress on its expansion program during the first half of the year. It’s currently working on CA$11 billion ($8.2 billion) of expansion projects that should start up through 2022. That’s about CA$1 billion ($750 million) above where it began the quarter as the company secured four new gas utility projects and approved another European offshore wind farm.

The company also took advantage of low interest rates to raise CA$6.9 billion ($5.2 billion) of capital during the first half of this year. As a result, it now has about CA$14 billion ($10.5 billion) of liquidity, enough funding to meet its needs through 2021.

With this foundation, Enbridge is increasingly confident in its long-term growth prospects. The company believes that it can grow its distributable cash flow per share at a 5% to 7% annual rate through 2022. With a strong balance sheet and relatively conservative payout ratio, Enbridge should be able to continue increasing its dividend, which it has done for the last 25 straight years.

Rock solid amid a raging storm

Enbridge’s business model proved to be unshakable during the worst downturn in the sector’s history. That’s keeping its big-time dividend on rock-solid ground. Meanwhile, with a strong financial profile and growth prospects, that payout appears to be headed higher in the coming years. So it’s an ideal stock for dividend investors to buy these days.

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Billionaire Stronachs split their company to settle family feud – BNN



A family feud that tore apart one of Canada’s richest families has been settled by splitting the company that owns some of America’s most famous racetracks.

Frank Stronach and daughter Belinda Stronach said Thursday they have ended a long and public battle for control of the family business. Belinda will get control of the Stronach Group’s thoroughbred racing and gaming businesses, which include Santa Anita Park and Gulfstream Park, plus related real estate.

Frank Stronach and his wife, Elfriede Stronach, will get full ownership of a thoroughbred stallion and breeding business, including Stronach Stables, and farming operations in Florida, Kentucky and Ontario. They will no longer have any interest in Stronach Group.

In October 2018, Frank Stronach sued Belinda and others, including Stronach Group CEO Alon Ossip, for C$520 million (US$393 million), claiming mismanagement of the family fortune.

Belinda Stronach, a former politician who briefly ran Magna International Inc., rejected the claims of mismanagement. She said she was trying to prevent her father from pursuing “idiosyncratic and often unprofitable projects” that threatened the family fortune.

Neither Stronach has any current involvement with the operations of Aurora, Ontario-based Magna, Canada’s largest car-parts maker.

“I am pleased that my father will be able to focus on an agricultural business and related projects that are his passion. The settlement will allow The Stronach Group to continue building successful companies with quality jobs that contribute to the community,” Belinda Stronach said in a statement.

After a few years of working as a machinist in Austria, Frank Stronach arrived in Canada in the early 1950s with a few hundred dollars in his pocket and built Magna into a company with revenue of $28.7 billion and net income of U$1.1 billion by 2011 — the year he stepped down as chairman.

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Stronachs settle family feud –



A high-profile feud among members of the Stronach family has been settled.

Under a settlement announced by The Stronach Group, control of the family fortune is basically split between two factions.

Former politician and business executive Belinda Stronach will remain chairwoman and president of The Stronach Group, with full control of its horse racing, gaming, real estate and related assets.

Her Austrian-born parents, Frank and Elfriede Stronach, will assume full ownership and control of a stallion and breeding business, all farm operations in North America and all European assets.

The family fortune was founded by Frank Stronach, who built the global Magna automotive manufacturing business — where Belinda worked for a time before entering federal politics.

Father and daughter issued a joint statement saying they were glad their disagreements had been settled.

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Bank of Canada cuts benchmark mortgage rate for 3rd time in months – Global News



House-hunting Canadians saw their buying power increase this week as the benchmark five-year mortgage rate reported by the Bank of Canada fell for the third time this year, easing a key stress test faced by borrowers.

The central bank said the rate fell to 4.79 per cent, after decreasing to 4.94 per cent in May and to 5.04 per cent in March.

Read more:
Bank of Canada keeps key rate at 0.25%, sees 7.8% GDP drop this year

James Laird, the co-founder of and president of CanWise, said Thursday the lower rates will be a win for some.

“If you just barely couldn’t qualify (for a mortgage), you might now qualify for what you were looking for,” he said.

“It is a move that will allow you to qualify just a little more than you could before.”

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Mortgage rates have been falling in recent weeks.

While most borrowers do not pay anything close to the benchmark posted rate for a mortgage, the rate is used when assessing borrowers as part of a financial stress test.

What you need to know before your deferring your mortgage payment

What you need to know before your deferring your mortgage payment

The check is meant to ensure homebuyers will be able to make their mortgage payments in the future if rates increase from the where they are today. The drop in the benchmark rate makes the test is easier.

According to’s mortgage affordability calculator, a family with an annual income of $100,000, a 10 per cent down payment and five-year fixed mortgage rate would have qualified for a home valued at $523,410 under the 4.94 per cent qualifying rate. Under the new rate, they can now afford $531,230.

Read more:
Coronavirus: What will happen to Canada’s housing market amid the pandemic?

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Laird said the rate drop was hardly a surprise because when underlying rates have been dropping, eventually posted rates catch up.

Though the decrease will help many, he categorized it as “not a major change.”

“Anyone was qualifying for a mortgage no problem, they are unaffected,” he said.

“Anyone who was not close to qualifying, they are also not affected.”

© 2020 The Canadian Press

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