Stefan Rotter
Investment Thesis
After the June price drop, Enbridge common (TSX:ENB:CA) shares yielded 7.52% (as of closing on June 28). This brought the yield of the company’s common shares close to the yield of its preferreds after resets.
Seeking Alpha
One of my “smart money” followers asked: ‘Assuming a 3% annual growth in dividends, would Enbridge’s common shares have higher perceived value than the company’s preferred over the next 5 years?’ This is a good question, and I decided to compare the perceived value of ENB:CA and CAD-denominated Series N (TSX:ENB.PR.N:CA, OTCPK:ENNPF) over the next 5 years. These preferreds recently underwent a reset of their yield and, for the next five years, are paying lucrative fixed dividends. As of December 1, 2023 (the reset date), the annual dividend increased by 31.7% from around $1.27 to $1.67 per share and on June 28 was yielding 8.01%. (All numbers are in CAD unless otherwise stated.)
