E Split Corp. Maintains Steady Dividends Amid Sector Volatility

E Split Corp. (TSX: ENS), a closed-end fund specializing in Enbridge Inc. securities, has reaffirmed its commitment to income investors by maintaining a consistent CAD 0.13 monthly dividend for its Class A shares since January 2023. This steady payout, totaling an annualized CAD 1.56, has positioned the fund as a standout income generator in a sector where yields average just 1.557%. With a dividend yield of 11.35% as of April 2025, E Split Corp. offers investors a rare blend of stability and high returns—but this comes with risks tied to its specialized structure and underlying holdings.

Dividend History and Financial Fortitude

The fund’s dividend discipline is underscored by its unwavering consistency: every monthly distribution from January 2023 through April 2025 has remained at CAD 0.13. This stability contrasts sharply with broader market volatility, particularly in energy equities. Financial metrics further reinforce this reliability. E Split Corp. reported a trailing payout ratio of 24.8%, calculated against an EPS of CAD 6.24, indicating the dividend is comfortably covered by earnings. Such a low payout ratio suggests resilience even if Enbridge’s dividends or capital gains shrink, though it also implies limited room for near-term increases.

The fund’s structure plays a critical role in sustaining payouts. E Split Corp. holds a portfolio dominated by Enbridge Inc. common shares, which provide both dividend income and capital gains. This focus allows the fund to distribute excess cash flow while prioritizing steady monthly payments. However, this reliance on a single issuer—Enbridge—introduces concentration risk, a point emphasized in recent disclosures.

Recent Announcement and Risk Considerations

On April 23, 2025, E Split Corp. confirmed the April CAD 0.13 dividend, with a record date of April 30 and a payable date of May 15. This follows a pattern of timely disclosures, though the fund’s press releases consistently remind investors that future distributions are not guaranteed. Risks cited include shifts in Enbridge’s dividend policy, changes in the fund’s portfolio composition, and broader economic headwinds.

Investors should also note the fund’s minimal dividend growth: the Class A shares have seen only a 0.21% average annual growth rate since 2018, reflecting the challenges of sustained increases in a low-growth energy sector. Meanwhile, the fund’s preferred shares offer a 7% annual yield on their CAD 10.00 issue price, providing a safer but less dynamic income stream with priority in liquidation.

Investment Analysis: Income vs. Capital Considerations

E Split Corp.’s Class A shares appeal primarily to income-focused investors seeking high yields. The 11.35% dividend yield is among the highest in the closed-end fund sector, but it demands scrutiny of underlying risks. The fund’s performance is inextricably linked to Enbridge’s fortunes; if Enbridge reduces its dividend or its stock price declines, E Split Corp. could face pressure to cut payouts.

Investors should also compare E Split Corp. to broader energy ETFs or Enbridge itself. While E Split offers amplified income, its closed-end structure can lead to trading at a premium or discount to net asset value (NAV). Monitoring NAV trends and dividend coverage ratios—like the 24.8% payout ratio—will be critical for long-term holders.

Conclusion: A High-Yield Play, but with Caveats

E Split Corp.’s CAD 0.13 monthly dividend remains a compelling proposition for income investors, backed by a robust payout ratio and consistent history. With a yield nearly seven times the sector average, it’s a standout in a low-yield environment. However, the fund’s reliance on Enbridge and its static dividend growth rate highlight the trade-off between income and flexibility.

Prospective investors should weigh the 11.35% yield against the risks of sector-specific downturns and structural limitations. For those willing to accept these risks, E Split Corp. offers a rare opportunity to capture outsized income. Yet, diversification remains key: pairing this fund with broader energy exposure or preferred shares could mitigate concentration risk while maintaining an attractive income stream.

In short, E Split Corp. is a high-reward, high-risk income vehicle—a bet on Enbridge’s stability and the fund’s ability to navigate an uncertain energy landscape. For the cautious income seeker, the data suggests patience and vigilance are as important as the dividend itself.