E Split Corp ENSPF

Correction

[Obscure1]

I posted earlier that I expect Middlefield might reduce the payout on the Prefs as interest rates go down.  They can't do that as the divi was fixed at $0.70 per year for 5 years beginning in June 2023.  So, we are stuck with the high payout to the Prefs for another 3 1/2 years (the announcement for the setting the next 5 years will likely be similar to the April 26, 2023 announcement. 

What does that mean?

The Pref holders are going to be able to collect $0.175 each quarter until June 28. 

Does that suck for ENS shareholders?

Yes.

Is there any upside while we wait?

Yes.  Last year, ENB provided guidance for 2024 as well as announcing a dividend raise on Wednesday Nov 29.  Given that ENB is a creature of habit, I suspect they will make a similar announcement on Wednesday Nov 27.  

I anticipate that ENB will raise the divi by $0.12 or maybe even a bit more.  Since ENS owns 0.44 shares of ENB per Unit, it would be reasonable to assume that ENS will collect another $0.05 Unit from the increase in the ENB dividend. 

Since the increase in the annual ENB dividend will only impact ENS's cash flow by about $0.05, it is easy to understand why the $0.175 increase to the Prefs announced last year would have such a powerful negative impact on Premium/Discount to the ENS NAV.  We are just going to have to wait it out for the next 3 1/2 years with the impact of the punch in the face being reduced a bit each year.

Does this mean ENS shareholders are stuck?

Not at all.  ENS will move in concert with ENB and the outlook for ENB remains bright imo.  If ENB is able to improve profit margins on their assets (which is what they are good a) the impact of the extra payout to the ENS Prefs will be negligible.

As far as Beuler's comments are concerned, if he is looking for a brainless ENS cheerleader, he shouldn't read my posts.  I'm a big fan of ENB and I use ENS as a postive cash flow proxy.  I post for education purposes so I have a fluff-free keyboard.  Ultimately, I expect ENB to power ahead and the ENS Discount issue will disappear over time. 

Not all news is good news.  The key is to understand the variables so that one make intelligent investment decisions.

[Beuler]

Blah blah, writing novels.. significant break out on Enbridge, gap fill to all time high likely.

[cttglvr]

Hey Obscure. I'm sure you posted on this before. With ENB going ex dividend tomorrow with the corresponding share price price drop does this affect ENS NAV? I don't think it should affect ENS NAV as Middlefield will receive the Enbridge dividend funds. Thanks as always.

[Obscure1]

cttglvr: You are correct about the ENB divi tomorrow having zero effect on the NAV of ENS. I bought a chunk for trading purposes recently at a cost of $12.83 which I just sold a few minutes ago for $13.54.  Several reasons for the sale including a quick win, but not really relevant as it was just a trade.  I haven't touched my core position and won't for the forseeable future.&

[Jagger7]

13.48 now good sale

[Experienced]

Osbcure,,,lol....I sold a bunch today as well for a trade profit.  Now back to market weight

[Experienced]

Obscure...you are close to this than I am... But.....it seems to me that the NAV for ENS should fall the day ENB goes x dividends.  The SP of ENB falls due to the payout of the dividend.  Since the dividends don't show in the NAV for ENS until they are booked when the dividend is paid the SP for ENS should fall x dividend ENB. Your other post illustrates this timing issue.....ENS

[Obscure1]

ENS receives the $0.915 divi so it is a non-event in terms of calculating the NAV. I just checked the math behind my formula that calculates the Live NAV, the Premium/Discount to the NAV, and a Trigger Price for a Raise.   My formula adds back the divi ($0.915) to the closing price of ENB that day in order to produce the required adjustment to calculate the Change in the ENB price

[Jagger7]

I think the raise on the preferred makes the most sense, the the common should jump