Is Enbridge a Better Ultra-High-Yield Dividend Stock to Buy Right Now Than Energy Transfer?

Core Viewpoint - Midstream energy stocks, particularly Enbridge and Energy Transfer, have shown significant performance over the past year, with Enbridge rising 33% and Energy Transfer 42% [1] Company Comparison - Enbridge operates extensive pipeline networks in both Canada and the U.S., while Energy Transfer's operations are solely within the U.S. [2] - Enbridge is more diversified, ranking as the largest North American natural gas utility company following acquisitions in 2023 [3] - Enbridge has a market cap of approximately $99 billion, with adjusted earnings exceeding CA$6 billion and distributable cash flow nearing CA$12 billion last year [3] - Energy Transfer's market cap is around$68 billion, with 2024 earnings projected at $1.08 billion and distributable cash flow of$1.98 billion [4] Growth Prospects - Enbridge anticipates adjusted EBITDA between CA$19.4 billion and CA$20 billion in 2025, indicating a year-over-year growth of nearly 17% at the midpoint [5] - Energy Transfer expects adjusted EBITDA between $16.1 billion and$16.5 billion for this year, reflecting a year-over-year increase of about 5% [5] - Both companies face similar industry dynamics and opportunities, suggesting comparable long-term growth prospects [6] Dividends - Enbridge offers a forward dividend yield of 6.05%, while Energy Transfer has a higher forward distribution yield of 6.58% [7] - Enbridge has a strong track record, having increased its dividend for 30 consecutive years, whereas Energy Transfer reduced its distribution in 2020 but resumed growth in 2022 [8] Valuation - Energy Transfer's valuation appears more attractive, trading at 10.7 times forward earnings compared to Enbridge's 21.5 times [9] - The price-to-sales ratio for Energy Transfer is 0.82, significantly lower than Enbridge's 2.87 [9] - The enterprise-value-to-EBITDA ratio for Energy Transfer is 0.82, while Enbridge's is 2.87, indicating a more favorable valuation for Energy Transfer [10] Investment Recommendation - Both Enbridge and Energy Transfer are considered strong options for income investors, but Energy Transfer is favored for its higher yield and appealing valuation [11] - Enbridge may be more suitable for investors seeking stability and those wanting to avoid tax complications associated with limited partnerships [11]