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.

He's positive with their plans. He used to own it for a long time, until pipelines were cancelled. They have good projects underway as they restructure. A solid holding and now is a decent time to get in. Dividend over 6%.

ENB-T vs. IPL-T. He owned ENB-T for a while. The payout was 48%. Their earnings have picked up considerably. They are reasonably profitable. They will have -5% earnings growth next year. You are secure in the yield. IPL-T is higher than ENB-T at a sustainable 60% with earnings pulling back 7% next year. He thinks both will trade sideways for a while.

They sold their non-core assets to de-lever, are simplifying their corporate structure and the Line 3 got approved. So, they fulfilled all their plans. But it's pressured by rising interest rates. Nice 6.3% yield which is safe and will grow. An income investor could buy it here.

TRP-T or ENB-T? At these prices, he thinks TRP-T is in fantastic shape and the mainline natural gas represents half of the company’s NAV. Within a short period of time he thinks this will decline to only about 10-15% of NAV. This signifies how the company is diversifying – although the stock is a little expensive right now. ENB-T is less dynamic, but he believes their infrastructure is advantaged (as there are few projects being approved) and the dividend continue to grow. You could own both and not be concerned.

All their pipelines are full. They will not be missing earnings. They are rolling up their complex structure, which he feels will make it more attractive to investors. They have committed to 10% dividend growth over the next 2-3 years. He thinks this is a $50 stock. Yield 6.2%. (Analysts’ price target is $54.36)