Q: I have ENB & BNS I my portfolio, for the dividend plus with the talk of reduced interest rates, I thought their stock value will increase. With this in mind, do you concur. I was looking at GEI, but I was wondering if they are not paying out more than they are bringing in. Do you feel this is a wise move.
5i Research Answer:
We think the sentiment regarding BNS and ENB is correct. BNS is valued at 9.6x forward earnings while ENB is valued at 17.3x forward earnings. Growth will likely not be huge in 2024 a for both stocks and will likely be greater in 2025 due to economic pressure in the short term. The dividends for both however we see as quite secure. GEI has a payout ratio of 96.75%, so it is not paying out more than it is bringing in, but it is definitely close to doing so. We like ENB and BNS more when looking at how safe its dividends are. GEI also is significantly smaller than the others which adds further risks.