Portfolio Update
The FiveTwenty portfolio received $170.94 in dividends in the past week. BEN and LEG paid their quarterly dividends during the week.
| Past Week Dividend | $170.94 |
| Current Quarter Dividend (Q1 2023) | $251.66 |
| LifeTime Dividend | $8,360.10 |
| Estimated Annual Dividend | $7,963.97 |
The capital allocation for the week of 01/15/2023 to 01/21/2023 will be used to add to our position in Enbridge (NYSE: ENB)
ENB – Position Update
Since our last check-in on ENB in week 15 of 2021, the company reported FY 2021 earnings on 02/11/2022, Q1 2022 earnings on 05/06/2022, Q2 2022 earnings on 07/29/2022, and Q3 2022 earnings on 11/04/2022. In addition, the share price increased 21% from C$46.22 to C$55.92 during that time.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 27 years | 26 years | |
| Yield | 6.15% | 7.06% | 4.48% |
| Payout Ratio | 64.42%1 | 69.91%2 | |
| P/E | 10.471 | 9.892 |
1 computed using TTM DCF of C$5.34 as of Q3 2022
2 computed using TTM DCF of C$4.60 as of Q3 2020
Q3 2022 earnings report
Did ENB’s latest earnings report raise any warning flags?
In Q3 2022, ENB increased distributable cash flow (DCF) in spite of a decrease in cash provided by operating activities (OCF). DCF growth in the quarter was $211 million, or $0.11 per share. Overall, OCF decreased 7.3%, DCF increased 9.2%, and DCF per share was 9.7% higher than in Q3 2021.
| OCF (in millions) | DCF (in millions) | DCF/share . | |
| Q3 2021 | C$2,313 | C$2,290 | C$1.13 |
| Q3 2022 | C$2,144 | C$2,501 | C$1.24 |
| % Change | (7.3)% | 9.2% | 9.7% |
Additional noteworthy developments during the quarter:
- Announced $.38 billion in newly secured growth projects, including the expansion of BC Pipelines’s T-South section at a cost of $3.6 billion. The expansion of the T-South section will add 300 million cubic feet per day of capacity.
- In October 2022, the company sold a minority of non-operating interest in certain pipeline in the Athabasca region to Athabasca Indigenous Investments for $1.12 billion in proceeds.
Looking ahead, ENB reaffirmed its 2022 full year guidance for DCF/share of $5.20 to $5.50. This represents a 5% to 11% growth over 2021. The companies secured growth program stood at ~$17 billion, $4.0 billion of which is expected to be placed into service in 2022.
Thesis
Why are we adding to our position in ENB?
ENB had a solid FY 2021 and has continued to steadily meet its financial performance goals in the first 3 quarters of 2022. The company is continuing to expand both is pipeline networks as well as its renewables portfolio, with a $17 billion backlog of growth opportunities.
With the current payout ratio of ~64% and ENB’s healthy balance sheet, we believe the dividend is safe for the foreseeable future. Therefore, we are adding to our position in the company at a yield that compares favorably to historical values.
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