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: I would appreciate your take on - The cracks in the Enbridge dividend story by David Milstead in the G&M dated Dec 3, 2017. Some of the key points in the article include (all CAPS from the article):

- ENBRIDGE EMPHASIZES 'AVAILABLE CASH FLOW FROM OPERATIONS' TO INVESTORS WHEN IT TALKS ABOUT THE SUSTAINABILITY OF ITS DIVIDEND. IN CALCULATING THIS MEASURE, IT IGNORES MOST OF ITS CAPITAL EXPENDITURES, DEDUCTING ONLY 'MAINTENANCE' CAPEX TO ARRIVE AT THE NUMBER. THAT HAS LEFT BILLIONS OF DOLLARS OF CAPEX OUT OF THE MEASURE OVER TIME. WHEN ALL OF THE COMPANY'S CAPITAL EXPENDITURES ARE DEDUCTED FROM OPERATING CASH FLOW, ENBRIDGE POSTS NEGATIVE FREE CASH FLOW IN NEARLY EVERY YEAR. STILL, THE COMPANY PAYS DIVIDENDS — AND ISSUES DEBT, AS WELL.
- For the third quarter, Enbridge reported $360-million in maintenance capital expenditures. Total capex was $1.95-billion. Depreciation, a measure of how much of the company's property, plant and equipment was "used up" in the period, was $848-million.
- In the last 10 years, from 2007 on, it was only in 2016 that Enbridge actually posted positive free cash flow, a paltry $83-million. The 10-year total is a staggering $24.1-billion in negative free cash flow. That's before paying out $7.4-billion in dividends. Perhaps not coincidentally, the company issued almost $25.6-billion in net debt over that decade. It now has $65-billion in debt on its books, including the tens of billions it took on in the merger with Spectra Energy Corp. this year.
- https://www.theglobeandmail.com/globe-investor/inside-the-market/the-cracks-in-the-enbridge-dividend-story/article37172663/

I would have expected that maintenance capex would be inline with the depreciation expense. Is Milstead highlighting one of the risks in ENB - ie., that the dividend is solid as long as the market has confidence in the Company and it can raise additional capital each year.

What mid/large-cap companies in this sector would you would recommend that have more conservative financials?

Thank you.
Read Answer Asked by rajiv on December 04, 2017
Q: HI, what would be your top 5, monthly dividened stocks or reits, for my TFSA. Longterm hold. Thanks.
Read Answer Asked by Dario on November 09, 2017
Q: I have owned these stock in substantial amounts for approx 3 years. I like the dividends. Last Jan/Feb they peaked at approx the same value oil is today.
Today oils up but as a group they are down. Am I crazy to think these companies are going to rebound even to levels of early 2017?
Is there an explanation for these stock prices? The dividends are attractive enough to keep me in - but better stock valuations seem elusive.
Read Answer Asked by David on November 02, 2017
Q: Hi peter and Team,
I have some ENF in my RIF A/C and loosing about 10%, am thinking to replace with a similar stock. Can you suggest one or two ?
Thanks as always,
Regards,
Tak
Read Answer Asked by Tak on October 30, 2017
Q: Have held both KEY & PPL for 5+ years & enjoyed substantial gains & excellent dividends from both. However, major changes have taken place in this sector and I have decided to move on. In our principal Cash acct we hold KWH.UN, DRG.UN, WSP, PKI, LNR, RY, WPK, SIS, & CHW - all dividend paying. Would appreciate your suggestions for 2 or 3 CDN. replacements. My RIFF investments cover USA, Asia & Europe. Thank you.
Read Answer Asked by Robert on October 25, 2017
Q: Looking down the road, I am uneasy about oil and gas, including pipelines, and I am wondering whether I should plan on easing out most of my investment in this sector over the next 5 years.

Am I being unduly pessimistic?

Can you recommend a good resource to help me become more knowledgeable on this sector?
Read Answer Asked by Carl on October 23, 2017
Q: Oil.  Is it making a rebound? 

If so where to invest. Companies that specialize in drilling , distribution or refineries?? 

Thanks. Barry
Read Answer Asked by Barry on October 12, 2017
Q: I am holding a full position (5%+) in each of ALA in a non registered account, PPL in a RRIF account, and ENF in a TFSA. I have decided that I am overexposed to the sector and
must reduce my positions. In your opinion which companies should be held for the long term and which should be sold? I also hold ALA.R in my RRIF as per your suggested opportunity, should the pending transaction be consummated.
Thank you for considering my question.
Read Answer Asked by Gail on October 10, 2017
Q: I own equal amounts of Veresen and Pembina. I do not want to double my shares in Pembina. Should I sell Veresen now (it is above the agreed selling price) or should I wait until the closing and sell off my additional Pembina shares at that time?
Read Answer Asked by William on October 03, 2017
Q: I have two unrelated questions. In a $3 million portfolio, I have about 100 holdings, which I would like to greatly reduce. I have ENB, ENF, IPL, PPL, and TRP. I would like to reduce the number to one or two of those names. My interest is capital gains and a good dividend. Which pipeline company will give me the best capital gains and divide over the next five years?

The second question relates to REAL. I bought the new issue at $ 13 and the present price is only $10.62. Should I sell and repurchase in 30 days or just sell the stock. What is the future outlook and the next reporting date?
Read Answer Asked by George on October 02, 2017
Q: This is comment on your answer to Brian's question. For the record the merger has been approved during the July 11th meeting. It is important to know that instruction on options have to be submitted by tomorrow. Otherwise the default is receiving PPL shares subject to proration.
Read Answer Asked by Saad on September 18, 2017
Q: Hi,

After having been burned regularly by buying oil gas stocks in the last few years - despite being assured prices are on the verge of recovery - I am reticent. I am interested in pipeline stocks because they seem less volatile, have good dividends, and some have been hit hard (Enbridge), can you answer this?
1) what do you think of pipelines in the next couple years? is there a better alternative for some growth and generous dividend?
2) buy now or wait for 5% position
3) what would be your top and second pick?
Read Answer Asked by Graeme on September 12, 2017
Looking for more? Sign up for a FREE 14 day trial! No credit card required

We invite you to sign up for a 14 day free trial of 5i Research!
Experience all the benefits and tools we have to offer; stock research, model portfolios, Q&A with our experts, and so much more. Join a community of like-minded investors today!