Enbridge Income Fund Holdings Inc.

Sound bite for Twitter and StockTwits is: Utility Income Fund. I would not invest in this fund. It is too complicated, the Income Fund has a negative Book Value and I own Enbridge Inc. which has an investment in this fund. Price would seem reasonable using my normal stock price testing, but I would not guarantee I values are the correct ones. See my spreadsheet on Enbridge Income Fund Holdings Inc.

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 stock and Enbridge Inc. as Enbridge Inc. is invested in the fund this stock is invested in.

What I hate about this fund is that it is difficult to analyze. I am not the only one. I noticed in Morningstar they give Basic number of shares at 116 and diluted as 741. They really do not say what the diluted shares are but if you divide the diluted EPS by Net Income it is around 117. The Morningstar page is here. Actually the annual statements do say that the diluted is 741, but also give basic as 74 and 1585.

I am very focused on what I want from a stock's statements, but this one makes life difficult. It makes me spend far too much time trying to figure what where the information is that I want. Looking the 2017 quarterly statement they give a description of the changes to the outstanding units. Why cannot they not just tell you the final result?

When looking at this stock you not only have to look at the statements for Enbridge Income Fund Holdings, but also the underlying fund that it is invested in and this is the Enbridge Income Fund. As far as I can see it does not matter that Enbridge Income Fund Holdings Inc. has great debt ratios. It does matter that Enbridge Income Fund has awful ones. However, I do not believe the book value on the income fund is really negative.

For example, the Liquidity Ratio for ENF is 4.90 and the Debt Ratio is 26.29.The Liquidity Ratio for the Fund is 0.41 and the Debt Ratio is 0.81. This means that the current assets cannot cover the current liabilities and that the assets cannot over the liabilities. The Fund has a negative book value. A negative book value means that they have paid out more than they have earned.

There is also Enbridge Income Partnership LP and the Enbridge Commercial Trust. It is also very confusing. I do not like investments that complicated. It is too easy to misjudge or make a mistake when analyzing complicated stocks.

Not everyone thinks about this stock as I do. TD Securities recently put out a report saying that ENF has a relatively low-risk business model and it would be a good one for income oriented investors. They gave it a Buy rating.

Dividends are good. The current dividend yield is 6.44% based on dividends of $2.05 and a stock price of $31.88. The historical dividend yield is 6.96% and the 5 and 10 year median dividend yields are 5.46% and 6.25% respectively.

The Dividend Payout Ratio for this fund is 86.54% with 5 year coverage of 86.00%. But this means nothing as the dividends payouts are really paid for by Enbridge Income Fund. As far as I can tell they paid out 101% of their distributable cash in 2016 with 5 year coverage of 91.8%. However it is difficult to find this information and I am not entirely sure of it.

Dividend growth is low with growth of dividends at 9.8% and 7.2% per year over the past 5 and 10 years. The last dividend increase was in 2017 and it was for 10%.

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 14.59, 17.23 and 20.24. The corresponding historical values are 14.75, 18.78 and 22.69. The current P/E Ratio is 14.76 based on a stock price of $31.88 and 2017 EPS estimate of $2.16. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $37.17. The 10 year median Price/Graham Price Ratios are 0.79, 0.93 and 1.12. The current P/GP Ratio is 0.86 based on a stock price of $31.88. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Book Value per Share Ratio is 1.06. The current P/B Ratio is 1.12 based on Book Value of $4,173M, BVPS of $28.43 and a stock price of $31.88. The current P/B Ratio is some 5.6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The historical median dividend yield is 6.96%. The current dividend yield is 6.44% based on dividends of $2.05 and a stock price of $31.88. The current dividend yield is 7.5% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

When I look at analysts' recommendations I find Buy (3) and Hold (10) recommendations. The consensus recommendation is a Hold. The 12 month stock price s $35.85. This implies a total return of 18.89% with 12.45% from capital gains and 6.44% from dividends with a current price of $31.88. The Hold consensus does not match the future possible stock price. That shows a rather high total return for a Hold recommendation.

Ivanka Thompson on Bangalore Weekly says that last month both Desjardins and Dundee reduced their ratings on this stock to a Hold. A Staff Writer at Akron Register says that the company has a low value Piotroski F-Score of 3. Juan de la Hoz on Seeking Alpha has done a recent analysis of this income fund company. See what analysts are saying about this stock at Stock Chase. Some like the parent company of Enbridge Inc. better.

Enbridge Income Fund Holdings Inc., through its investment in Enbridge Income Fund, holds energy infrastructure assets. Its web site is here Enbridge Income Fund Holdings Inc.

The last stock I wrote about was about was Linamar Corporation (TSX-LNR, OTC-LIMAF) ... learn more. The next stock I will write about will HNZ Group Inc. (TSX-HNZ, OTC- CDHPF)... learn more on Friday, October 13 around 5 pm. Tomorrow on my other blog I will write about Money Show 2017 - John Collier... learn more on Thursday, October 12, 2017 around 5 pm.

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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