Q: hi all
what are your thoughts on ENCC. Is its dividend sustainable?
thanks
Joe
what are your thoughts on ENCC. Is its dividend sustainable?
thanks
Joe
5i Research Answer:
ENCC is a Canadian energy covered call fund. The call option premium enhances income. 5-year annualized return is 30.20%. Fees 0.84%. The dividend can vary and has ticked down in the past. But note it may pay out more than it earns, and this can lower net asset value. With its option strategy, there should always be 'some' dividend paid, but the unit price of course will vary. We would not view it as super-conservative because of the volatility of the sector, but it is meeting its objectives, certainly. This fund will lag the sector in a rally, but for investors needing extra income and comfortable with its set-up, we think it is fine.