Q: ENB-T has outperformed PPL-T in past 12 months. ENB has P/E of 21.81 and dividend yield of 5.94% where as PPL-T has P/E of 16.00 and dividend yield of 5.27%. Is it a good idea to switch at this price based on Sell high and Buy low? Beside these two metrics, is future earning growth of ENB-T makes it outperforming other pipeline stocks listed on TSX? Your views please.
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5i Research Answer:
ENB growth does look slightly better, but it also gets a premium as it is the largest in the sector, it has a strong history of dividend increases and has lots of projects on the go. We are not big fans of switching within sectors just because one is doing better. Momentum tends to carry a while. We do like PPL overall, but would be less keen on a switch today, and really would not want to if any taxes apply on an ENB sale.