Enbridge Income Fund Holdings Inc.

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Sound bite for Twitter and StockTwits is: Reasonable to expensive, insider buying. The insider buying suggests that insiders are confident in the fund's future. The stock is a bit pricey, but there is not many stock price testing I can do. See my spreadsheet on Enbridge Income Fund Holdings Inc and on Enbridge Income Fund.

I do not own this stock of Enbridge Income Fund Holdings Inc. (TSX-ENF, OTC-EBGUF). I have followed this stock for some time but I have not owned it. I do own Enbridge Inc. (TSX-ENB, NYSE-ENB). You would not want to invest in both this fund and Enbridge Inc. as Enbridge Inc. is invested in this fund.

The one thing that I do not like about this fund is that it is complex to analyze. Not only do you have financial statements for the Enbridge Fund Holdings, but also for the Enbridge Income Fund it invests in. The harder it is to analyze a stock, the easier it is to make mistakes about the stock. This complex structure was set up in 2011.

This stock has a good dividend and low dividend increases. The current dividend yield is 4.76%. Dividends have increased by 3.8% and 4.9% per year over the past 5 and 10 years. If you had bought this stock 5 or 10 years ago paying a relative median price your dividends would have covered 44% and 90% of the cost of your stock purchase price. If you had bought this stock 5 or 10 years ago paying a relative median price you would be earning 10% and 11.7% on your original purchase price.

Shareholders have done well with total return to date of 18.20% and 14.10 over the past 5 and 10 years. The portion of this return attributable to dividends is 5.85% and 5.72% and to capital gains is 12.35% and 8.39%. Shareholders did even better to the end of December 2014 with total return at 31.17% and 16.33% over the previous 5 and 10 years.

Outstanding shares have increased by 7.4% and 15.2% per year over the past 5 and 10 years. The stock has good growth in income and EPS, but negative growth in cash flow.

This company does not report revenue, only income. The income growth over the past 3 years is up by 35.3% per year. The Income per Share is up by 11.8% per year over this same time period. Analysts believe that income will increase by 40% this year. If you look at the 12 month period to the end of 2014 and the 12 month period to the end of the second quarter income is up by 20.9%.

EPS is up by 33.3% and 18.22% per year over the past 5 and 10 years. Cash Flow is down by 1.6% and up by 1.9% per year over the past 5 and 10 years. CFPS is down by 14.6% and 5.1% per year over the past 5 and 10 years. However, if we look at CFPS over the past 3 years it is up by 17.1% per year. Analysts expect good growth in cash flow for 2015.

Insiders seem to be confident in this stock. There is only insider buying and no insider selling. Insider buying is at 0.26% of the market cap of this stock. This is relatively high. Most insider trading is around 0.01% or 0.02%. 70% of the stock I cover have insider trading at 0.09%.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.52, 15.81 and 17.10. The corresponding 10 year values are mostly higher at 14.68, 17.23 and 20.24. The current P/E Ratio is 19.52 based on a stock price of $32.40. This stock price testing suggests that the stock price is still reasonable, but it is getting expensive and way above the relative median price.

I get a Graham Price of $10.41. The 10 year low, median and high median Price/Graham Price Ratios are 1.23, 1.48 and 1.74. The current P/GP Ratio is 3.11 based on a stock price of $32.40. This testing suggests that the stock price is relatively expensive. Problem is with the book value component of the Graham Price. The accounting for this fund shows a positive book value as do analysts, but this completely ignores the Enbridge Income Fund accounting, the fund which this stock invests in.

The 5 year median dividend yield is 5.56% a value some 14% above the current dividend yield of 4.76% based on dividends of $1.54 and a stock price of $32.40. This stock price testing suggests that the stock price is reasonable although it is above the relative median. However, the historical average and historical median dividend yields are 7.96% and 7%, values that are 40% and 32% above the current dividend yield. This stock price testing suggests that the stock price is expensive.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month stock price consensus is $41.10. This implies a total return of $31.61% with 4.76% from dividends and $26.85% from capital gains. Also, I would like to note that this stock is down by 19.7% in 2015 from the end of 2014.

This company Enbridge Income Fund Holdings Inc. has announced they are raising money by selling more shares. This Motley Fool article talks about Enbridge Inc.'s drop down of assets to this fund. There are also comments on this company at Stock Chase.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Enbridge Income Fund Holdings Inc. is a publicly traded corporation. The Company, through its investment in Enbridge Income Fund, holds high quality, low risk energy infrastructure assets. The Fund's assets include a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in the various pipelines comprising the Saskatchewan System, and interests in more than 400 megawatts of renewable and alternative power generation capacity. Its web site is here Enbridge Income Fund Holdings Inc.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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