Investing

Investing Idea - Dividend Growth

  • Last Updated:
  • Dec 11th, 2017 10:37 am
Tags:
None
Deal Addict
User avatar
Oct 1, 2011
4950 posts
781 upvotes
Messerschmitt wrote:
Nov 27th, 2017 11:01 pm
Yea thanks, gave it a read.

So why would one not go for ENF instead of ENB. 6.7% yield is significant vs 5.2%. Is it more risky? It's part of ENB right?

I don't really understand the point of ENF as a fund for ENB. Does ENB syphons money to ENF for payouts? How does the system work? Theoretically wouldn't ENF mirror ENB since they would be the same "company" ?

I was gonna jump on ENB, but now I'm asking myself not go for the extra 1.5% if it's basically the "same" company.

Rod mentions he actually likes ENF is better than ENB, but I still don't understand. An article mentions ENF payout is 93.88% forcasted to go over 100%.

So bottom line. No negatives going ENF instead of ENB?
I still haven't figured out how to read ENB's financials so I've been keeping a curious eye on it, too.

I do own ENF. TD Direct Investing's fundamentals info tells me that ENF's payout is 94.79%...and ENB's is currently 113.47%. ENB will have to grow its revenues (and I guess people are confident it will).

I also own PPL and its payout is 156.63% but I'm still too indecisive to sell it!
Member
Feb 26, 2017
331 posts
93 upvotes
peanutz wrote:
Nov 28th, 2017 12:37 am
I still haven't figured out how to read ENB's financials so I've been keeping a curious eye on it, too.

I do own ENF. TD Direct Investing's fundamentals info tells me that ENF's payout is 94.79%...and ENB's is currently 113.47%. ENB will have to grow its revenues (and I guess people are confident it will).

I also own PPL and its payout is 156.63% but I'm still too indecisive to sell it!
For pipelines its best to look at them from FFO as that is what the dividend is paid from (FFO excludes depreciation which is high for pipelines). Going by memory ENB currently has about a 60% payout ratio while ENF has roughly a 90% payout.

ENF has very stable assets that have been dropped down from ENB as a way to raise funds (ENB sells assets to ENF who then issue debt to pay ENB). There is very little commodity price risk with ENF as almost all revenues are long term take or pay contacts (ENB has some more commodity price and seasonality exposure). Another thing to keep in mind is that ENF is depended on ENB dropping assets down them to grow. A big part of future growth for ENF is when line 3 is expanded (this is not guaranteed).

I own both.
Sr. Member
User avatar
Apr 23, 2009
825 posts
125 upvotes
If this makes you feel better, ENB is currently my top holding at 10.5%. If you add ENF to this, my total Enbridge exposure is 17.5%. And I am still buying if it gets below $45. I wish I was more diversified but couldn't pass up great buying opportunities in last 12-18 months. And that's way my diversification is out of whack. But really can't complain too much as I bought a lot them at 52-week low. Almost 70% of my portfolio is made up of 10 positions. I have about 40 more stocks that makes the rest of the 30%.

ENB.TO 10.5%
CNR.TO 9.1%
EIF.TO 7.5%
HCG.TO 7.4%
ENF.TO 7.0%
BAM-A.TO 7.0%
SJ.TO 6.7%
BEP-UN.TO 5.0%
ATD-B.TO 3.6%
AD.TO 2.8%
TD.TO 2.5%



Messerschmitt wrote:
Nov 27th, 2017 5:45 pm
Hi Rod. Everybody is running at you with questions and opinions on a tons of stocks. You could make a fortune as a financial analyst lol, but before you decide to charge us poor slobs, I'm eyeing ENB very heavily. Planning to invest a significant amount in this and double, even triple my position. It's probably going to be 15-20% of my portfolio if I do that.

In your opinion, is ENB very undervalued currently? What are your risks in your view with this company? Their dividend is extremely juicy too. I'd like to double up or triple up as soon as tomorrow. Your feedback is extremely appreciated.
Deal Addict
Dec 3, 2014
1040 posts
183 upvotes
Ontario
ruchir wrote:
Nov 28th, 2017 9:22 am
If this makes you feel better, ENB is currently my top holding at 10.5%. If you add ENF to this, my total Enbridge exposure is 17.5%. And I am still buying if it gets below $45. I wish I was more diversified but couldn't pass up great buying opportunities in last 12-18 months. And that's way my diversification is out of whack. But really can't complain too much as I bought a lot them at 52-week low. Almost 70% of my portfolio is made up of 10 positions. I have about 40 more stocks that makes the rest of the 30%.

ENB.TO 10.5%
CNR.TO 9.1%
EIF.TO 7.5%
HCG.TO 7.4%
ENF.TO 7.0%
BAM-A.TO 7.0%
SJ.TO 6.7%
BEP-UN.TO 5.0%
ATD-B.TO 3.6%
AD.TO 2.8%
TD.TO 2.5%
Are those percentages of your Canadian portfolio only or is this a percentage of total portfolio?
Sr. Member
User avatar
Apr 23, 2009
825 posts
125 upvotes
Total portfolio (80% CAD, 20% USD)
70% (All CAD) - ENB, CNR, EIF, HCG, ENF, BAM-A, SJ, BEP-UN, ATD-B, AD, and TD
30% (mostly USD but some CAD) - MCD, BAC, S, WMT, SHW etc.




llpresident wrote:
Nov 28th, 2017 11:27 am
Are those percentages of your Canadian portfolio only or is this a percentage of total portfolio?
Deal Fanatic
User avatar
Jul 17, 2008
7685 posts
1383 upvotes
ended up getting 200 shares of enf @ 29.53 and 100 enb @ 46.46

I've put an alert at $42 for enb in case the price goes this ridiculously low to buy more if that's the case.

banks, teleco's and utilities are quite over priced in the past last months so I'm going to ride this dip for now.
Deal Addict
Dec 3, 2014
1040 posts
183 upvotes
Ontario
ruchir wrote:
Nov 28th, 2017 11:51 am
Total portfolio (80% CAD, 20% USD)
70% (All CAD) - ENB, CNR, EIF, HCG, ENF, BAM-A, SJ, BEP-UN, ATD-B, AD, and TD
30% (mostly USD but some CAD) - MCD, BAC, S, WMT, SHW etc.
Good show. How’d you end up with so much CNR?
Deal Expert
User avatar
Sep 19, 2004
20497 posts
3168 upvotes
Waterloo
rodbarc wrote:
Nov 28th, 2017 11:23 pm
@Messerschmitt @ruchir @Chance7652 @peanutz

I created a new post on my website regarding Enbridge and Enbridge Income Fund.

Enjoy!


Rod
Thank you Rob
I'm sure MANY are glad to hear your great take on ENB/ENF (probably #1 Q recently)
Always just afraid that markets is irrational longer than we can stay "sane/solvent" :(

Despite long-term hold, yield & dividend growth, being flat/green near 52w high (e.g. TRP/PPL/AQN/CHR) is better than being near 52w low (e.g. ENB/ENF/ALA/CJR.B)
I believe Buffett said that we should want our holdings' prices to stay low (for DRIP or re-buy) until cashout time/near retirement <- I keep telling myself that :D
Which Credit Cards to sign up? >> Jerry's List of Credit Cards with $200+ Welcome bonus/Aeroplan & AMEX Churning FAQ
AMEX Personal 60K || Business Platinum 75K || Biz Gold 40K || SPG 25K
Sr. Member
User avatar
Apr 23, 2009
825 posts
125 upvotes
Well....by accident I would say. CNR is old and boring. They are the most efficient railway in North America. CNR caught my attention in the summer of 2016 when it was around $84. I read an in-depth article about it and started digging into it. I knew that some years ago Warren Buffet had acquired a significant stake in Burlington Northern Santa Fe. So railways was always in my mind. CNR has been returning over 17% compounded annually for last 20 years. Knowing that they did relatively well during 2007-08 crisis, I started accumulating CNR with it was in low eighties.


llpresident wrote:
Nov 28th, 2017 11:44 pm
Good show. How’d you end up with so much CNR?
Deal Expert
User avatar
Sep 19, 2004
20497 posts
3168 upvotes
Waterloo
Damn it, ENF, you have to do this now? another raise? last one was $33

Short Description: Treasury Offering of Common Shares via Bought Deal
Price: $27.80 CDN per share.
Settlement: On or about December 7, 2017.


Sorry Rob may have to re-evaluate ENF again with latest news
https://ca.investing.com/news/stock-mar ... bln-775452
Nov 29 (Reuters) - Enbridge Income Fund Holdings Inc ENF.TO :
* ENBRIDGE INCOME FUND HOLDINGS INC. RELEASES 2018 GUIDANCE AND LONG TERM FINANCIAL OUTLOOK
* ENBRIDGE INCOME FUND HOLDINGS INC - EXPECTS 2018 ACFFO FOR FUND GROUP TO BE IN A RANGE OF $2.45 BILLION TO $2.65 BILLION
* ENBRIDGE INCOME FUND HOLDINGS - NOW EXTENDING 10% ANNUAL DIVIDEND GROWTH GUIDANCE BY ADDITIONAL YEAR TO 2020
* ENBRIDGE INCOME FUND HOLDINGS INC SEES 2018 CORE MAINTENANCE CAPITAL EXPENDITURES OF BETWEEN $65 MILLION AND $100 MILLION

Enbridge Income Fund To Raise $500 Mln In Share Offering, Raises Dividend 10%
2017-11-29 05:09:00 PM ET (MT Newswires)

05:09 PM EST, 11/29/2017 (MT Newswires) -- Enbridge Income Fund Holdings (ENF.TO) said Wednesday it will look to raise $500 million from a bought deal offering of common shares as it raised its dividend 10% and promised similar hikes through 2020, in releasing its 2018 guidance and long term financial outlook.

The company said a group of underwriters led by Scotiabank, RBC Capital Markets and TD Securities agreed to buy 18 million common shares priced at $27.80, along with an overallotment option for a further 2.7 million shares should demand warrant. Enbridge Inc (ENB.TO), which holds a 20% stake in the company, has agreed to acquire at least 4.47 million of the offered shares.

Enbridge Income, which distributes money from the pipelines and oil and gas infrastructure managed by Enbridge Inc, said separately that its board declared a cash dividend of $0.1711 per share payable on January 15 to shareholders of record on December 29. It raised the monthly dividend 10% to $0.1883 for the February 15 payout as it extended its promise to raise the rate by 10% annually through 2020.

The company's business outlook for the 2018 to 2020 planning period is expected to be strong, with continued available cash flow from operations growth within the Liquids Pipelines segment as a result of a full year contribution from $3.7 billion of new capital projects coming into service in 2017, primarily within the Regional Oil Sands business. In addition, Canadian Mainline performance is expected to further strengthen in 2018, driven primarily by increasing throughput and a higher average Canadian residual toll. Other factors leading to the improved performance include a higher effective hedge rate on the US dollar revenues generated by the Canadian Mainline and cost savings from enterprise-wide initiatives.

Also, the company expects 2018 ACFFO for the Fund Group to be in a range of $2.45 billion to $2.65 billion inclusive of the impact of the common equity issuance announced by the company today for further investment in the Fund Group. This assumes core maintenance capital expenditures of between $65 million and $100 million and cash taxes in the range of $200 million to $260 million.

Shares in Enbridge Income Fund Holdings dropped $0.40, or 1.4%, to $28.94.

Price: 28.94, Change: -0.40, Percent Change: -1.4
Last edited by jerryhung on Nov 29th, 2017 4:41 pm, edited 1 time in total.
Which Credit Cards to sign up? >> Jerry's List of Credit Cards with $200+ Welcome bonus/Aeroplan & AMEX Churning FAQ
AMEX Personal 60K || Business Platinum 75K || Biz Gold 40K || SPG 25K
Deal Expert
User avatar
Sep 19, 2004
20497 posts
3168 upvotes
Waterloo
I guess ENB drops the news at the same time too

Enbridge Brief: Offering C$1.5 Bln of Common Shares By Private Placement
https://ca.investing.com/news/stock-mar ... ent-775563

Enbridge Brief: Completes Strategic Plan and Financial Outlook; Announces Dividend Increase of 10% for 2018 and Confirms Growth Through 2020
Nov 29 (Reuters) - Enbridge Inc ENB.TO :
* ENBRIDGE ANNOUNCES OFFERING OF C$1.5 BILLION OF COMMON SHARES BY PRIVATE PLACEMENT
* ENBRIDGE INC - PROCEEDS FROM OFFERING WILL BE USED TO PAY DOWN SHORT TERM INDEBTEDNESS PENDING INVESTMENT IN CAPITAL PROJECTS
* ENBRIDGE INC - TO ISSUE 33.5 MILLION SHARES FROM TREASURY AT A PRICE OF C$44.84 PER SHARE
Enbridge Completes Strategic Plan and Financial Outlook; Announces Dividend Increase of 10% for 2018 and Confirms Growth Through 2020
2017-11-29 04:52:41 PM ET (MT Newswires)

04:52 PM EST, 11/29/2017 (MT Newswires) -- Enbridge Inc. (ENB.TO, ENB) after trade Wednesday announced the finalization of its strategic plan and outlook following the merger with Spectra Energy, which closed on February 27, 2017. The Plan includes a three-year financial outlook covering 2018 to 2020. It summarized the key elements of the Plan, which will be further discussed at its investor conferences on December 12th and 13th, in New York and Toronto, respectively.

It highlighted:

- Strong business outlook through the three-year planning horizon; resulting in a three-year compound annual ACFFO/share and dividend growth of 10% through 2020; dividend increase of 10% for 2018.

- Plan based on a remaining capital program of $22 billion through 2020.

- Rationalizing the asset mix to a pure regulated pipeline and utility business model emphasizing low risk and strong growth in three core businesses: Liquids Pipelines and Terminals, Gas Transmission and Storage and Gas Utilities.

- Identified $10 billion of non-core assets and intend to sell or monetize a minimum of $3 billion in 2018.

- Accelerating deleveraging to further strengthen the balance sheet; Debt o EBITDA of 5.0x expected by the end of 2018.

- Enbridge today announced a $1.5 billion privately placed common equity issuance and intends to issue an additional $4 billion of hybrid securities through the end of 2018

- Enbridge Income Fund Holdings Inc. today announced a $0.5 billion public common equity issuance.

- Enbridge's target credit metrics through the Plan horizon can be satisfied with additional asset sales, sponsored vehicle equity and the dividend reinvestment program; no additional follow-on common equity required for the Plan.

- Strong three-year outlooks provided for Enbridge Income Fund, Enbridge Energy Partners and Spectra Energy Partners (SEP).

- To enhance Spectra Energy Partners' cost of capital, Enbridge has provided SEP a formal proposal to exchange its incentive distribution rights and General Partner economic interests for newly issued limited partner units of SEP.

Price: 45.75, Change: -0.71, Percent Change: -1.5
Which Credit Cards to sign up? >> Jerry's List of Credit Cards with $200+ Welcome bonus/Aeroplan & AMEX Churning FAQ
AMEX Personal 60K || Business Platinum 75K || Biz Gold 40K || SPG 25K
Deal Addict
Nov 9, 2013
1922 posts
679 upvotes
Edmonton, AB
The dividend growth is nice, the dilution is not.
[OP]
Deal Addict
User avatar
Dec 14, 2010
4356 posts
3337 upvotes
That's how midstream companies are funded. Raising equity or slowing dividend growth were the 2 possibilities to address funding concerns. Fundamentally these are well run businesses that will continue to grow and produce exception dividends and total return. Good entry opportunity.

If you buy ENB / ENF today, you know 5 to 7 years from now if you made a good decision. Not what price does in the next week, month or year. Midstream companies are safer with better returns than downstream or upstream companies. This is a tough sector. Having a business in that sector that continues to deliver superior CAGR and dividend growth year over year, regardless the wild commodity price run is pretty good - the smaller price oscillation is simply an opportunity to acquire more shares with a higher yield. ENB or ENF is not a short term play, so don't read much into price oscillation or how it behaves when oil is up or down.


Rod
Everything about my Investing and automated Trading strategies to boost your income: https://boostyourincome.ca

Top