Enbridge is rewarding patient shareholders by raising its dividend 10 per cent in 2018, but one Bay Street money manager isn’t impressed by how the company plans to help fund the hike.

In an interview on BNN, Agilith Capital Principal Patrick Horan, who is shorting Enbridge, said the pipeline company’s plan to issue $1.5 billion worth of stock to help finance both the dividend increase and corporate growth is shortsighted.

“This is the fourth time in four years they’ve raised money and coincidentally they promised to increase their dividend by 10 to 15 per cent four years ago, and all they’ve done to backfill that is raise more capital,” he said. “You’re sucking and blowing at the same time. This makes no sense.”

While Horan rebuked Enbridge’s plan, it was initially well-received by public markets. Shares of Enbridge were the best performer on the TSX Composite in early trading Thursday, rising 5.5 per cent to $48.50 per share as of 10 a.m. ET Thursday. In spite of the jump, shares of Enbridge remained under water on a year-to-date basis, down 14.1 per cent.

Though Enbridge said its plan to increase its dividend at a 10 per cent annual pace through the end of the decade would not result in excessive payouts, Horan took issue with the company’s accounting practices in determining payout ratios.

He said the company’s use of adjusted funds from operations (AFFO) to determine how much it should pay out is being used to obscure underlying weakness in its earnings.

“[AFFO] is not an audited number, the audited number is earnings. They have not earned their dividend in like three years, four years, and they continue to raise it. I think it’s absolutely insane and irresponsible,” he said. “The fact that they’re had to raise money four times in four years tells you that this company actually doesn’t understand what capital management is.”

“It doesn’t make sense to raise the dividend and then go out and raise equity, it just doesn’t. That just breaks every corporate finance 101 textbook.”