Business

Enbridge boosts dividend 33% after restructuring

Enbridge Inc. has announced a 33 per cent increase to its next quarterly common share dividend as part of a restructuring plan that will transfer part of its business to an affiliated income fund.

Creating income fund helps pipeline company access capital

Al Monaco, president and CEO of Enbridge Inc., has restructured the company to move the liquid pipelines business into an income fund. (Mike Ridewood/Canadian Press)

Enbridge Inc. has announced a 33 per cent increase to its next quarterly common share dividend as part of a restructuring plan that will transfer part of its business to an affiliated income fund.

The Calgary-based pipeline company said the dividend will increase to 46.5 cents per share with the next dividend payable on March 1, 2015.

The Calgary-based pipeline company also announced 2015 adjusted earnings per share guidance of $2.05 to $2.35. Its stock rose 9.5 per cent on the news.

Enbridge said it plans to transfer its Canadian Liquids Pipelines business — valued at about $17 billion — to its Canadian affiliate, Enbridge Income Fund  under the planned restructuring.

Enbridge said these moves are designed to enhance shareholder value while providing more funding for its capital program and asset acquisitions.

Lowers cost of funding

"Our plan to transfer the Canadian Liquids Pipelines business to Enbridge Income Fund comes after an extensive review of the potential to further enhance the value of our $44 billion growth program and lower the cost of funding for that program and for new investment opportunities," said president and CEO Al Monaco.

"We believe that the drop down of our Canadian Liquids Pipelines business into the fund will transform it into a high growth vehicle and be beneficial for shareholders of both Enbridge and Enbridge Income Fund Holdings."

Enbridge's board of directors also approved a revised dividend payout policy range of 75 per cent to 85 per cent of adjusted earnings. The previous payout policy range was 60 per cent to 70 per cent.

Enbridge's annual dividend growth rate is expected, based on current planning, to average between 14 per cent and 16 per cent from 2015 to 2018.

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