Enbridge (ENB.TO)

He likes it at this level. The line 3 expansion is coming. All interest-sensitives have pulled back. They've tried to fix their balance sheet, which they've succeeded, but that hasn't stopped the stock from decreasing. Now is a good time to buy. They are raising their dividend.

Preferred Enbridge shares: If you're looking for a preferred energy stock that pays a big dividend, then look at this. The preferred share market is complicated, some being extremely interest rate sensitive. Others are called "rate resets" which temper the impact of rate increases. ENB preferreds will never go much above $25 (nor fall from it).

(Past Top Pick Oct. 18, 2017, Down 13%) This hasn't worked out yet. Interest rates have taken a bite out of the valuation of interest-sensitive stocks, and their Line 3 replacement pipeline faced more opposition than he expected. Also, the US Federal Energy Regulatory Commission invalidated the cost of capital advantage that ENB was getting from a complex structure of listed limited partnerships. At least, this will now clean up that messy corporate structure. They are integrating their Spectra Energy deal. The dividend is safe and will grow. Also, the rotation into defensive names like this may be a tailwind.

(A top pick May 11/18, up 3%). Still likes this. It has been beaten up. Generates a great dividend which creates stability.

The problem for this company is that once the price of oil fell the demand for pipelines declined. The growth prospects were diminished, and they had some growth priced in. The discount on Canadian crude affected them. The demand for pipelines will be there as long as politicians and electric vehicles don’t get in the way. Has a lot of debt. Still the dividend is safe. It will come back to 50 dollars in the next couple of years.

Enbridge scares him: heavy debt. Sure, they're selling off assets as they restructure, but they're also hiking the dividend--is that a good idea? Good managers though, top of the line. Interest rates will rise and that's a headwind considering their debt. 6.4% dividend.