Q: I am an income investor as I live off the dividend stream I receive. I recently started a small position in BIP.UN. I have a full position in EMA. EMA seems to have had a pretty good run lately and also I believe they have reduced their projected dividend growth rate over the next few years. I am thinking of selling my EMA position and shifting it to BIP.UN as BIP.UN seems to have more upside on unit appreciation, a higher dividend and perhaps a higher dividend growth rate. Thoughts on this potential swap??
5i Research Answer:
While BIP is 'utility like' it has a much more diverse set of businesses and industry exposure than EMA. Thus, under the right conditions, it should have more upside potential but also more overall risk. We think this is priced in and the stock has very good potential, but such a switch may change a portfolio's characteristics. We think EMA is fine, and we would be more interested in owning both than making a full switch here.