A different perspective on owning ENS vs ENBHere is how I look at the decision to own ENS vs ENB
ENB closed today at $47.68 and pays a $3.66 divi. You have to pay $12.96 to receive $1 in dividends.
ENS closed today at $12.23 and pays a $1.56 divi. You have to pay $7.84 to receive $1 in dividends.
Therefore, you have to pay 65% more for ENB to get the equivalent payout offered by ENS.
One should never look at yield in isolation as yield is tyically influenced by risk.
We all know what the risks are of owning Splits.
The real question imo is the risk/reward ratio of owning the ENS Split vs owning its ENB, its underlying security
Questions that one might ask themselves are:
1) how predictable are ENB earnings? my answer would be "very"
2) how likely is it that ENB will continue to raise it dividend in future years? my answer would be "very likely" as they have raised the divi 28 years in a row and have stated clearly that it is their intention to continue to do so
3) how likely is it that ENB is going to trade below $33 per share, the point where ENS will withhold paying a monthly dividend? my answer would be "very unlikely as ENS still paid its monthly divi in the darkest moments of Covid when the world shut down and oil futures were trading in negative numbers"
3) how long is ENB likely going to trade below $33 if it ever happens? my answer would be that the street knows that ENB has proven over and over again that it has an extremely capable management team in terms of making careful and astute acquisitions and running a tight ship, and that economic downturns have virtually no negative effect on cash flow or earnings. as such, professional fund managers are very open to buying the dips created when fearful retail investors sell
Bottom line for me is that paying a 10% premium to the NAV for ENS gives you the ability to buy $1 of dividends at a 65% discount to owning the underlying security. seems like a bargoon given the extremely low risk factors involved. but what do I know