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EEP Enbridge Partners vs EEQ Enbridge Management

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  • Mar 14th, 2018 4:21 pm
Jr. Member
Nov 19, 2017
101 posts
68 upvotes

EEP Enbridge Partners vs EEQ Enbridge Management

Hi,

I know these stocks have high debt. Just doing some due diligence exercises. Can someone tell me what the difference is between these two stocks? Specifically, I am not referring to the fact that Management is a company that manages EEP and has its success depend on the success of EEQ. I mean as a stock holder. Tracking these two stocks for the past 10 years, I see that they track each other pretty much identically. This kind of makes sense because EEP supposedly pays out a cash dividend, and EEQ pays the same dividend amount (true or not?) "in kind" of share offerings (instead of cash) (am I correct?). If this is the case, why does EEQ outperform EEP when we trace the companies beyond 10 years?
4 replies
Jr. Member
Nov 19, 2017
101 posts
68 upvotes
frougal wrote: I'm also trying to decide whether to buy ENB or EEP or EEQ...found this article very helpful: https://seekingalpha.com/article/413971 ... of=45&dr=1
I ended up getting ENB, but also getting EEQ instead of EEP in my TFSA. Does this confirm: EEQ is like EEP with a DRIP so that there are no withholding taxes to be paid if EEQ is held in a TFSA?
Sr. Member
User avatar
Mar 13, 2012
865 posts
145 upvotes
Planet Earth
organeer wrote: I ended up getting ENB, but also getting EEQ instead of EEP in my TFSA. Does this confirm: EEQ is like EEP with a DRIP so that there are no withholding taxes to be paid if EEQ is held in a TFSA?
You really should understand what your investing in a non-RRSP accounts where there is a treaty in place negating withholding taxes. MLP's (EEP) are just nasty for tax treatment so you get hammered in a TFSA more the then withholding tax.
EEP is not like EEQ at all. See here and here for information on the differences.

Investing in foreign domiciled securities is a not something you should do in a TFSA as you loose the ability to recover withholding taxes. Why would you do that knowingly reducing your returns on each payment by 15% or more? Stick to the Canadian domiciled NYSE:ENB for US dollar payments and no withholding taxes. There are several other Canadian companies paying USD dividends which are inter-listed.

From the CRA website:
Foreign Funds

You can contribute foreign funds to a TFSA. However, your issuer will convert the funds to Canadian dollars (using the exchange rate on the date of the transaction), when reporting this information to us. The total amount of your contribution, in Canadian dollars, cannot exceed your TFSA contribution room.

If dividend income from a foreign country is paid to a TFSA, the dividend income could be subject to foreign withholding tax.
I don't want to seem like I am condescending but trying to help you out retain the most money you can from the US & CAN tax people!
If at first you don't succeed, destroy all evidence that you even tried.
Jr. Member
Nov 19, 2017
101 posts
68 upvotes
Hey Allen,

Thanks for the reply. I don't think you're trying to be condescending. However, I also think you're giving me a yes to my request for confirmation. It seems like you are agreeing with my understanding that: EEQ is not like EEP at all. According to your links, it sounds like EEQ is meant to track EEP. Instead of EEP's >10% dividend, to which I would have withholding tax in a TFSA, I get the shares paid in kind as additional shares. Thus, is no transfer of US funds and I am not subject to withholding taxes. The only thing I would have been taxed on is the sale of stocks that I bought and those shares that were also paid-in-kind in place of dividends, which would all be considered capital gains tax, to which I would not have to pay taxes for in a TFSA.

Cheers

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