ENS breakdown by the numbersI just did a quick analysis of ENS, not detailed but close enough
A look at the latest financials (which pre-date the most recent Raise) every $1.00 move in the share price of ENB affects the share price of ENS by approximately $0.44.
In terms of actual cash, ENS outlays approximately $0.90 more each year than it takes in. Therefore, ENS needs the ENB share price to appreciate by approximately $2 per share annually in order for the NAV of ENS to remain neutral.
ENB raised its dividend from $0.35 to $0.81 over a 6 year period between 2014 and 2020 but the "go-go" divi increase days are done. These days, ENB is only raising its dividend by $0.10 to $0.12 per year which equates to about $0.05 per year to the NAV for ENS. At the current rate of dividend increases, it would take many years for ENS to achieve cash flow neutrality.
If the Dominion acquistion improves cash flow immediately for ENB as the company guided, perhaps ENB will increase its dividend at a faster pace in the future. However, based upon the fact that ENB seemed to be the only buyer willing meet Dominion's price, I wouldn't expect the acquistion to provide much if any windfall gain.
Given that ENB guided a couple of years ago for a growth rate of 5% to 7% per year going forward, and all things being equal it would be reasonable to expect the share price to grow at a similar rate.
The current share price of ENB is $46.54. Assuming a 6% increase (mid point of the anticipated growth rate) then a reasonable twelve month price target for ENB would be $49.33. That is an increase of $2.79 per share which exceeds the $2 increase needed by ENS to maintain a neutral NAV. As such, one could reasonably expect the share price of ENS to appreciate over time.
Of course the market will push and shove the share price of ENB around, but if one believes the guidance offered by ENB (I certainly do), then the ENS divi should be safe. Given that ENS pays approximately a 5% higher yield than ENB, owning ENS makes sense if you can live with the increased leverage risk. In the case of ENB vs ENS, I think the risk is worth it as ENB moves further and further away from transporting liquids and dealing with Canada's political agenda.
As noted above, my quick analysis is not comprehensive. However, I have come to appreciate simplicity the older I get as long as nothing of significance is left out.