Q: The dividends alone on these companies are becoming quite alluring. What are the risks of a cut? Or a drop in the share price from where we are today looking out about 5-10 years? From the dividend alone, one could nearly double their investment in that time frame. I don't normally chase yields, but it's hard not to when both of these companies are trading around the same levels as they were in 2016 (or earlier).
What should happen to these companies share prices if/when interest rates get cut in June?
Please deduct as many credits as necessary.
What should happen to these companies share prices if/when interest rates get cut in June?
Please deduct as many credits as necessary.
5i Research Answer:
Sentiment may improve with rate cuts, however as they are largely expected we would perhaps not expect too much dramatic action right away. We think both are quite attractive for long term income investors. No dividend is guaranteed, but we would not see the possibility of any cuts here as very high at all. ENB raised its dividend in November; BNS last raised in May 2023. But both are expected to keep dividend hikes continuing. Both companies are trading below historical valuation levels. It may be an up and down ride, but we think each will be higher, perhaps significantly so, in a few years from now.