Enbridge's Long-Term Take-Or-Pay Contracts: What Investors Should Know

Core Insights - Enbridge Inc. (ENB) is a leading midstream energy company that generates up to 98% of its EBITDA from midstream assets supported by long-term take-or-pay contracts or regulated returns [1][8] Business Model - The take-or-pay agreements ensure that shippers pay fees regardless of asset usage, providing ENB with stable cash flows and shielding it from volume and price risks [2][8] - ENB's business model is characterized by predictable cash flows, high creditworthiness, and the ability to invest in growth capital projects at favorable terms [3] Industry Comparisons - Other major midstream energy companies, such as Enterprise Products Partners LP (EPD) and Kinder Morgan Inc. (KMI), also generate stable cash flows through extensive pipeline networks and long-term contracts [4][5][6] - EPD's pipeline network exceeds 50,000 miles and includes inflation-protected contracts, while KMI transports approximately 40% of the natural gas produced in the U.S. [5][6] Financial Performance - ENB shares have increased by 28.8% over the past year, outperforming the industry average gain of 26.1% [7][8] - The company trades at a trailing 12-month EV/EBITDA multiple of 15.65X, higher than the industry average of 14.08X [10] Earnings Estimates - The Zacks Consensus Estimate for ENB's 2025 earnings remains unchanged over the past week, with projected earnings of $2.19 per share [12][13]