The report for this Enbridge Rate Reset preferred share is updated and rated (higher) Buy at $16.56.
I know, I know, this one and almost all rate reset preferred shares have been heart breakers. They do pay their dividends as promised but many like this one have fallen in value and then after partially recovering has fallen again. Enbridge Inc. Rate Reset Preferred Shares ENB.PF.A
It currently pays $1.02425 based on last reset at the then Canada bond yield of 1.437% plus the spread of 2.66%. Price now $16.56, yield 6.18%.
The next reset is in about 21 months December 1, 2024 and seems almost certain to pay higher at that time. Current Canada 5 year yield is 3.48%. If that held this would reset to pay (3.48% plus 2.66%) = 6.14% of $25 = $1.535 for a yield of 9.27% on the current price. Sure we don’t know where the Canada 5 year will be and it certainly could be lower. But probably very unlikely to be as low as 1.437% again unless we have a financial disaster calling for 0 interest rates again.
It’s always possible that these shares will fall in value. But I find the cash yield attractive. And I think there is a good chance here for a capital gain.
I’ll take the 6.18% until December 1, 2024 and take my chances on the reset and the market yield going forward. I will likely add to my position on Monday.