Investment Q&A

Q: A friend recently sent me an article on Enbridge written by David Milstead and published in the Globe And Mail Dec. 3 2017. The article refers to the cracks in the Enbridge dividend story. I think the following quotes from the article summarizes the author's contention that Enbridge does not have the cash flow profile to be an income investment.
THE MISSING BILLIONS
ENBRIDGE EMPHASIZES 'AVAILABLE CASH FLOW FROM OPERATIONS' TO INVESTORS WHEN IT TALKS ABOUT THE SUSTAINABILITY OF ITS DIVIDEND. IN CALCULATING THIS MEASURE, IT IGNORES MOST OF ITS CAPITAL EXPENDITURES, DEDUCTING ONLY 'MAINTENANCE' CAPEX TO ARRIVE AT THE NUMBER. THAT HAS LEFT BILLIONS OF DOLLARS OF CAPEX OUT OF THE MEASURE OVER TIME. WHEN ALL OF THE COMPANY'S CAPITAL EXPENDITURES ARE DEDUCTED FROM OPERATING CASH FLOW, ENBRIDGE POSTS NEGATIVE FREE CASH FLOW IN NEARLY EVERY YEAR. STILL, THE COMPANY PAYS DIVIDENDS — AND ISSUES DEBT, AS WELL.
Can you please comment on this based on your analysis of the company, your assessment of its cash flow profile and its ability to maintain and grow its dividends.
Thanks
John

Q: Hi 5i team,
From your 3 portfolios, which are the stocks that interlisted on US exchanges, and which stock pay their dividends in US$? Thanks.

Q: Hi Peter
Do you think it is time to buy back ENB.
What is your outlook for SHOP. I am thinking of adding to my position.
I don't have any health stock at the moment, do you have any suggestions?
Thanks
Margita

Q: I have a question about which two of these 3 companies(ENB,PEY,BIR) which you buy at this time and why?
Thanks

Q: Do you have any suggestions for stocks that have been unjustly beaten up lately? Thanks

Q: Hi Peter. To my dismay, I currently hold too many pipelines... Enbridge, Pembina, & Inter Pipeline. I wish to cut 2 of the positions and then possibly pickup Algonquin Power. I also own Fortis & Emera. Which pipeline would you suggest keeping, and your reasoning behind it. Also, do you feel 3 power utilities would then be too many and if so, which 2 would you prefer? I welcome your input. Thanks.

Q: I have recently taken a full position in Enbridge and am thinking of taking another half due to the price being so deflated and the strong dividend. Should they cut their dividend do you think that would that take more than 15 percent off the price?

Q: I've decided to begin building an income portfolio and have chosen the companies listed above. (Mostly from your Income Portfolio). I am retired but my pension income covers my monthly expenses. I'm looking for companies that you believe are strong enough to maintain, and hopefully increase), dividends in the long run. I understand we are in a climate of interest rate increases and income stocks could suffer as a result so I'm wondering if I should wait to begin building this portfolio. My intention is to round out the portfolio by adding companies from your balanced portfolio. My questions are:
1. Can you suggest a strategy that you consider to be wiser as I begin to develop my new portfolio?
2. Do you consider the companies I have chosen to be the best choices for a new portfolio considering all current investment metrics? Could you suggest any I have missed?
Thank-you for your continued support.

Q: Peter and team

Thanks to member Walter, I have looked at a website that lists the U.S. preferred shares that trade on an American exchange. I realize that while U.S. stocks are not your focus are there any preferred shares that trade on an American exchange that you would recommend for an income investor? Are these p/s any more complicated than ones issued by Canadian companies ? I believe there are some companies on the TSX that have issued preferred shares that pay in U.S. $ and still are eligible for the Dividend Tax Credit. Are you familiar with any of these names?

Thanks

Paul

Q: I sold these stocks mainly due to the fact that they are down 20% from my cost base and needed some Losses to offset some Gains. My decision now is to either repurchase these 30+ days forward or buy some other stocks to replace these. I have a long time frame and a balanced portfolio. Your suggestions would be appreciated. Stephen

Q: I understand that the key criterion for evaluating a company’s ability to continue to pay a dividend is “ free cash flow”.

1. What is ENB’s free cash flow?
2. What is the dividend payout ratio?
3. Is free cash flow projected to grow over the next 3 years?
4. I looked for this information on your “profile “ page for ENB.
I did find 5 yr dividend growth 17.48 ... is that a percentage number for that time period?
I did find price to cash flow but not the information I was looking for.

Can you help me both with the information requested and provide some guidance in how best to interpret and use the profile information.

Thanks for all your help here.

Q: Could you please rank these stocks for growth assuming the sector ever improves.
Could you also do another list of just the dividend payers ranking income strength (safe and/or growing divi)

Thanks.

Q: I am down 50% in ALA and 17% for ENB in my TFSA.
Does it make any sense to hold or should I just sell. If sell, what should I replace them with for a long-term hold?

Q: I hold both IPL (1.7%) and ENG (2.2%) in my portfolio. ENB has been hit harder over the last 12 months. Do you believe it will have a better recovery than IPL and if so, would it make sense to sell IPL and add to my ENB position. They would be no tax consequences.

Q: Hi,

Just wondering what your take is on the steady decline in share price over the past year?
Thanks:)

Q: Peter and staff,

In order of preference, please list your favourite utility stocks for an income investor. Please subdivide into electrical, gas and pipelines.

Thank you and may thanks for your great service.

Paul

Q: In my TFSA currently have BCE, ENB, FTS, TRP, CNR, SLF, BNS and TD - Currently down about 5% in the portfolio. I'm looking to make a change to get some growth in lieu of dividends - what would you recommend keeping and buying.
Thanks

Q: At what point does 5i acknowledge the severity of the problems at these companies, including reducing their 5i stock ratings? Both of these companies have been severely punished for very good reasons. Too much debt. Cant get the prices they wanted for asset sales. Cant sell shares into the market for a decent price. Interest rates are rising. They have backed themselves into a corner and have really damaged themselves, ENB more so then ALA. ENB future dividend increases are a fantasy, a cut is more likely. Yet still rated an A- ?

Q: Hello 5i,
In the recent sell off I sold enbridge for a tax loss and bought Algonquin as a replacement, thinking to sell it and buy enbridge again after thirty days. But, I have been thinking about keeping Algonquin in place of Endbridge. This because of possibly growing problems with pipelines and also the postive outlook for cleaner energy with Algonquin. I have been wondering, though, whether the absence of pipelines would be a big negative point for my utilities sector. So, I guess the question is whether clean energy utilities like Algonquin and Bep can replace the pipelines without too much loss in the utilities sector of one's portfolio?

Q: Hello 5i team,
I want to add some funds to the energy and financial sectors and I currently hold both ENB and FSZ from the model portfolios. Both have had increasing dividends for the past 5 years but both have also gone down in the past year.

I was wondering if you have any idea why FSZ has declined and if it is still ok to add to both these holdings?

Thank You,
Andrew