Possible Stock Split

Well it was officially clarified yesterday that there might be a possible stock split for Enbridge share holders.

"(Marketwire - 02/25/11) - Enbridge Inc. today provided clarification with respect to the proposed two-for-one stock split announced February 22, 2011.If approved by shareholders at the Company's Annual and Special Meeting May 11, 2011, the record date for the stock split is expected to be May 25, 2011."

So what does this mean for my Enbridge shares? Basically my shares will double and the value and dividend will be halved. Some would argue that you don't gain anything with a stock split, but I see it as an opportunity for stock growth.

When talking to people about investing in solid companies the first thing they ask is, "How much are the shares?" When I tell them that they are over $50 a share the response is usually "Wow, that's expensive!" Most dividend paying stocks tend to be stagnant once they rise over $60. Depending on the dividend, as the yield starts to decrease, so does the appeal to investors. By lowering the share price, you allow more investors to buy in which increases earnings for the company. Enbridge has split their shares in '99 as well as '05 allowing more investors to buy in at a more affordable price.

 From what I've seen with stock splits, there is usually spike in share price before the stock split occurs. If you purchased ENB at its current value of $57.75 and it increased $3.00 before it spilt, then you would be ahead of the same person who bought in at $30.38. I will be buying more ENB next month because I am very confident that my Enbridge shares will be with me along the road to early retirement and beyond.

 (Disclosure: Long ENB )