skip to content
  1. Home
  2. >
  3. Investment Q&A
You can view 3 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hello Peter and Ryan,
Nice article in the Globe about ENB
https://www.theglobeandmail.com/globe-investor/inside-the-market/bmo-sees-once-in-a-multi-year-buying-opportunity-for-enbridge/article37015852/

I have a question on the last part of the paragraph. The analyst does a good job explaining why the target price would increase in the long run, but the sense is better to do an equity issue than adjusting the dividend. Do you agree with this? Crescent Point kept issuing equity and did not bode well for the stock. I know the stocks are not the same, but would you expect a drop in share price if ENB does an equity issue? I have 7 percent weighting and am down. Is it best to keep that weight for now or take some loss and move it to TransCanada. Thanks very much.

We see strong rationale for ENB to reaffirm the 10-12-per-cent dividend growth guidance. While we found it surprising that management did not reiterate its 10-12-per-cent dividend growth guidance on the Q3/17 call, deferring the details to the December investor day, we believe it is a prudent exercise for ENB to continue to revisit its payout policy in the context of the record-high 5.5-per-cent dividend yield and credit rating overhang. In the end, we believe ENB will reaffirm the current dividend guidance: we believe issuing equity is less value destructive than tempering dividend growth given the material market valuation compression."
Read Answer Asked by umedali on November 20, 2017