Enbridge Income Fund Holdings (ENF.TO)

This now owns all the primary assets of Enbridge (ENB-T). From that perspective he likes it. This company is following the same playbook that Enbridge followed to great success; keep raising the dividend, have good shareholder relations, communicate your story, execute on your plan and your stock will go up. There are going to be huge financial needs that this company is going to have to do. They will be coming back to shareholders over and over and over again.

The parent company’s stock popped when they dropped down assets into this. It is a matter of what your underlying goal is regarding investments. If it is to derive a high amount of income, then this would be the right avenue. Dividend yield of 5.3%. (See comments under (ENB-T).)

This business has been transformed recently. Enbridge (ENB-T) has dropped down a lot of assets to this income fund. The strategy going forward is that this income fund will be a yielding vehicle, and you will get a little more growth out of Enbridge the parent. It is going to use the equity in this company to fund Enbridge growth. You are looking at a very stable yield, high quality assets, which are very sensitive to commodity prices, but more sensitive to volume. A very conservative yield well covered. If you are looking for solid yield going forward, this is the place to get it. He is looking for better growth on the Enbridge side.

Thinks you can really bank on a mid-single digit to double digit cash flow and dividend growth. The parent is going to drop additional assets into this, which is where most of the growth is going to come from. The only thing you have to watch out for are equity issues, but he thinks they will be participated in by both retail and institutional investors.

For an RESP for the next 15-20 years? That is perfectly appropriate. This is a fund that was created by the pipeline, and it is rolling assets down into this portfolio. Recently it got down to a price where it was a 5% yield. There are further assets to be rolled down and the dividend should continue to increase. A good, long term investment.

He would look at this at a 3% level lower than your support. (Caller indicated support at $31.) You always get a little bit of wiggle room off of a support level. There is no rush to look at names that are bottom fishing or weak.

There will definitely be more shares issued, but the company has backstopped those needs out to around 2020, and he thinks they will be very careful about putting out deals that will be well received. If looking for yield and stable, more contracted assets, this is a reasonable option. Dividend yield of 4.6%.

Enbridge (ENB-T) or Enbridge Income Fund (ENF-T)? Both of these are dividend payers and energy infrastructure companies, so they are not taking real commodity risks. If he had to choose, he would prefer Enbridge because it has such a bigger market cap and is more of a “go to” name for investors, both domestically and globally.

He has been selling ENB-T and buying this. They are predicting a 10% increase in the dividend in September and possibly another in December. He bought it for the yield. It’s not going to be exciting, but it will be a safe, stable investment.

They announced they were dropping down assets into the income fund. It has been known in the market. The form of the deal announced recently was different than expected. She thinks it is attractive. Stay here if you are looking for income but if you can stand more growth, and less income, then move to the parent company.

Trading right in around its BV, so it is not expensive by any stretch of the imagination. It is also trading pretty much right at its FMV. It is hard for him to get excited about this as an income fund. There are other income funds with a lot more potential.

Enbridge (ENB-T), the parent, is dropping assets down into this. Usually in these cases, he prefers the parent. Did a big drop-down lately which has been a big positive for them. It is fine; he just prefers to own the parent.

Enbridge (ENB-T) is transferring their liquid gas business into this income fund. Over 5 years, there has been a tremendous growth in liquids. This is really more of a pure yield play, which is why it has done a little bit better. In both cases they are businesses that are tied to yields without a lot of volatility. Very richly valued. He would avoid these areas.

Stock vs. Stock. ENB-T vs. ENF-T. Prefers ENF-T right now. There was movement of assets between ENB-T and ENF-T and you saw that affect valuation.

Payout ratio is 86%. He sees 18% cash flow growth over the next couple of years from drop-downs from the parent. Given Enbridge’s (ENB-T) assets that are being dropped down, he thinks they are going to be able to grow in just about any sort of oil environment. The problem is the way they are going to be financing some of their drop downs, by possibly issuing equity.