Enbridge (ENB.TO)

North American pipeline operator. Offers an attractive yield. They are doing all the right things. They got their big line 3 project approved. They had a very strong quarter and are on track to meet their guidance. They should be able to grow their dividend by 10% every year through 2020. (Analysts’ price target is $53.84)

(A top pick October 18/17, down 5%) This has been underwhelming. Were early in getting involved in the name. Have struggled with the debt load they inherited. But stock is back in gear. They got approval on their Line 3 replacement. They have cleaned up their complex corporate structure. Have divested of some core assets. Has a 6% yield and guidance to grow their dividend 10% over the next year or so.

(A Top Pick March 1/18 Up 15%). There were issues on the debt side that have been cleared up with asset sales and the headwinds associated with changing MLP rules in the US do not look as severe as before. A great company that will benefit from the Line 3 project approval. Yield 6%.

He is not a fan of it. It has a strong brand in Canada and pays a great dividend but that is about it. A lot of investors underestimate its risk. He thinks their restructuring is positive. But it is going to take some time.

After buying assets from Sempra in the US, they have been selling assets to reduce pressure on the balance sheet. The advancement of the Line 3 project is positive. He would continue to hold it and sees it as a symbol of the revival in North American energy. He thinks the dividend is safe, although the growth is slowing.

The sale of some of their assets to Brookfield makes a lot of sense. Takes away some of the worries that some people had on funding. Some assets sales are going to come in the next while. Spectra was a good acquisition for them. They are in a much better situation than they were a few months ago.

He does not own pipelines. They have come down a lot. The bigger issue has been regulatory issues. They are fighting a big headwind with our governments today. As it gets cheaper and cheaper it could look attractive to him but with today's regulatory environment, it does not.

This is another interest-sensitive stock that is at risk from rising interest rates. It is overvalued by 10% compared to his model. The company is doing a whole lot of financial engineering. He would like to see the balance sheet after all the shenanigans are finished. He think that ultimately the stock will go to about $35.

The risk-reward is favourable. He sees support near $40 and would begin to build a position here between $40 and $46 and would add to it above that range.

You have to look at the quality of the business behind the high dividend when selecting a dividend paying stock. On one hand they are increasing the dividend but on the other they are decreasing the debt. Just looking at the yield is over simplifying it. He would own if after knowing the risk is mitigated in the price of the stock.

As the Line 3 project got approved a lot of the uncertainty has been removed. The stock has responded but still there is a lot of upside as the yield should get below 5% [5.7% now]. They sold a portion of their hydro assets at a very good price. Funding is not an issue. (Analysts’ price target is $53.00)

They sold a lot of their nat gas assets to reduce their heavy debt. He got stopped out of it. He was happy to see it rebound, but he's not eager to get back into it (he prefers too many other stocks). He's neutral about it.

The stock popped a little bit with the approval of their Line 3 project. The route is not yet settled but the process is clear. They are simplifying their corporate structure. They are planning to sell about $10 billion of noncore assets to pay down debt and have announced sales of over $7 billion, which is $4 billion ahead of schedule. They expect to grow the dividend by 10% until 2020, andcash flow will grow with this because Line 3 will come online in late 2019. (Analysts’ price target is $52.99)

This had been a short for him because the utilities were expected to drop in price as interest rates rose--and they did. They were also relatively expensive and Enbridge had a debt problem. However, they have sold assets and are improving their balance sheet. Their payout ratio is now looking meaningfully better than it was. He no longer sees it as a short but he does not recommend it yet as a Buy. They company is still not cheap, interest rates will rise further, and the balance sheet problems are not yet fully resolved. This stock has room to drop further.

Moved to sell part of its non-pipeline assets for a reasonable price. Starts to look more attractive. With its restructuring, it may get back to its nice long-term trend. Political environment is still uncertain. Its going back to its roots, which makes it easier to analyze and a more attractive investment.