ENBRIDGE INC. $56 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 846.4 million; Market cap: $47.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.enbridge.com) gets 90% of its revenue from pipelines that pump oil and natural gas from Western Canada to customers in Eastern Canada and the U.S. The remaining 10% mainly comes from distributing gas to 2.1 million consumers in Ontario, Quebec, New Brunswick and New York State.

New pipelines and other projects boosted Enbridge’s revenue by 164.1%, from $12.5 billion in 2009 to $32.9 billion in 2013. Earnings rose 68.8%, from $857.4 million to $1.4 billion. The company sold shares to help pay for its expansion, so per-share earnings rose at a slower pace of 50.8%, from $1.18 to $1.78.

Enbridge now plans to spend $42 billion on new pipelines and other projects over the next few years. Of that total, $37 billion of these projects already have secure commitments from oil producers, which cuts the risk of these investments. The company expects these new assets to increase its earnings per share by 10% to 12% each year through 2017.

This plan excludes projects Enbridge is considering but has not yet decided to build. The biggest of these is the Northern Gateway pipeline, which would pump crude from Alberta’s oil sands to Kitimat, B.C. From there, tankers would ship the oil to customers in Asia.

The project faces strong opposition from environmentalists and First Nations. The Supreme Court also recently issued a ruling that makes it easier for aboriginal groups to claim title to their traditional lands. That could hinder new developments in B.C.

Slowly building support for Gateway

However, Enbridge does not expect the Supreme Court’s ruling to block Northern Gateway. There are no land claims along the pipeline’s route, and 26 of 45 First Nations have already agreed to become part owners of the pipeline.

It will cost at least $7.9 billion to build Northern Gateway. If the company satisfies all 209 conditions imposed by regulators, including carrying $950 million of liability insurance to cover the cleanup of any potential oil spill, the pipeline could begin operating in 2018.

Meanwhile, Enbridge expects to finish $9.9 billion worth of projects in 2014, including doubling the capacity of its 50%-owned Seaway pipeline, which pumps oil from Cushing, Oklahoma, to the U.S. Gulf Coast. Enbridge’s share of this expansion’s cost is $1.2 billion U.S.

The company is also spending a total of $700 million (including $400 million in 2014) to reverse the flow on its Line 9 pipeline in Eastern Canada. As a result, this line will pump crude oil from Sarnia, Ontario, to refineries near Montreal. In addition, Enbridge will increase the line’s capacity to 300,000 barrels a day from 240,000.

Meanwhile, Enbridge continues to invest in renewable energy projects, as these businesses help improve its relationships with regulators and environmentalists.

Since 2002, the company has invested $4 billion in 12 wind farms, four solar projects and one geothermal plant. These facilities sell their power under long-term contracts at fixed rates, which cuts their risk.

Structure keeps cost and risk in check

Enbridge often invests in projects outside its main operations through its publicly traded affiliates.

It owns 20.5% of Enbridge Energy Partners L.P. (New York symbol EEP), which operates its U.S. oil pipelines. The company also holds 32.3% (67.3% economic interest) of Enbridge Income Fund Holdings Inc. (Toronto symbol ENF), which owns oil pipelines and terminals in Western Canada, as well as renewable power plants and 50% of a natural gas line.

Recently, rival pipeline operator Kinder Morgan Inc. (New York symbol KMI) announced that it would consolidate its publicly traded affiliates with the parent company. However, Enbridge plans to keep its current corporate structure, as it helps lower the cost of developing and operating new projects.

Enbridge will have to borrow most of the cash it needs to complete its ambitious expansion plan.

That will increase its long-term debt, which at $27.6 billion is already a high 58% of its market cap. However, steady cash flows from these new regulated operations will help Enbridge pay down its debt.

Long history of rising dividends

Enbridge’s new projects should also give it more cash for dividends. The company has paid dividends since it began trading publicly in 1953 and has raised its payout each year since 1996.

The current annual rate of $1.40 a share yields 2.5%. Enbridge aims to pay out 60% to 70% of its earnings before unusual items as dividends.

The stock trades at 29.2 times Enbridge’s likely 2014 earnings of $1.92 a share. The company’s new projects should increase its earnings to $2.24 a share in 2015. The stock trades at a more reasonable 25.0 times that forecast.

Enbridge is a buy.