Enbridge (ENB.TO)

(A Top Pick June 15/17, Down 15%) Stock has pulled back for a number of reasons: the Spectra acquisition, need to do asset sales to pay for it, pulled back dividend to 10%. The Line 3 expansion approval in June is the biggest overhang. Yield is over 6%. Market is not going to give Enbridge much credit for Line 3 going through. Trading at a very attractive multiple. Income-sensitive stocks like this one have been hit. If you don’t hold it, buy half a position.

The pipelines have been pressured this year due to troubles in building pipelines. They're also interest-rate sensitive. ENB offers some decent value now with solid growth prospects. The dividend is sustainable. Look at this and start
picking away at it. There's still uncertainty around the Kinder Morgan pipeline--who will eventually buy it?

It's the biggest conundrum on Bay St. It was once a darling, but now? The collapse in oil and anti-oil sentiment has pushed this stock down. Pays a 6.5% dvidend and should grow. But its debt is nearly as large as its market cap. Can ENB survive in a world that's so anti-pipeline? Foreign investors are walking away from Canadian energy.

Owns it. Has been a great stock for them for many years, had some issues more recently. Had some issues because they couldn’t get Northern Gateway to pass. They own pipelines, gas utilities, wind farms, etc. which gives a guaranteed rate of returns, but you need to grow, so they wanted to do Northern Gateway but that was taken away from them. Now in the process of replacing Old line 3 going through the U.S., hopefully that will go through. But most recently bought Spectra Energy and probably took on too much debt to do that. Thinks its over sold now and will see some recovery. Not going to make a lot of money with pipelines and utilities while the interest rates go up.

(Past Top Pick on May 15, 2017, Down 22%) He still holds it. All the bad news is in by now, so it can't get worse. Short-term, ENB's line 3 expansion's plan B has been approved but on June 26, ENB may get approval for it's preferred plan A route which will result in either $4 upside or $2 downside. Wait for an entry point. The current dividend yield of 6.6% is their highest ever.

He would stay away given all the problems that the company has. Finance minister is going to make announcements soon but could be disappointments. The yield is very attractive. Debt level high.

(Past Top Pick on July 12, 2017, Down 14%) They've endured a perfect storm: rising interest rates; high debt,; Ottawa disallowed a key tax deduction; and delays on their flagship line 3 expansion running through Minnesota. But he's hopeful. They posted a good qaurter and believes Minnesota will greenlight line 3. This is an epic buying opportunity.

In the U.S., changes in tax law for MLP’s hurt Enbridge’s ability to drop down assets into a more beneficial tax rate. In Canada, the problems of building new pipelines conflict with Enbridge’s planned future infrastructure projects. He is not worried about the dividend yield. The business would have to get a lot worse before it cuts the dividend. However, if the yield gets up to 7%, which will happen if the stock drops another 10%, he thinks the company will have to look at its yield.

(A Top Pick March 1/18 - Up 5%.) He really likes it. Still one of his top picks. They have been pounding the table about this name. Double down on their position around mid-November.

Just reported strong earnings. All the negative headlines are fully on the stock. They are putting 50-year assets in the ground. Yield 6.2%. (Analysts’ price target is $52.12)

The dividend is safe. The overhang is the Line 3 expansion awaiting final approval from Minnesota, expected mid-2018. The company is confident, and has gotten approvals elsehwere. If this happens, it will be a definite
catalyst. You can buy a half-position now and see if the decision is positive.

He has been negative on the pipelines for a number of years because they took on a lot of debt and increase the dividend only by increasing the payout ratio. He is not ready to step into it here. Rising interest rates will continue to put pressure on the sector. They need to use cash flow to reduce debt to be more sustainable.

What's the relationship between Enbridge and its Income Fund? It's complex. Enbridge owns 90% of the Fund which traditionally trades at a higher multiple. The board will clean up the structure. The equity issues at the fund level will ultimately roll up into Enbridge. It's basically two different ways for them to issue capital for two different purposes.

(A Top Pick June 16/17 - Down 22.7%) Chose it for better growth than its peers and a better valuation on a free cash yield. 2017 was messy with production outages and balance sheet concerns and lately with opposition to their line 3. Kind of a perfect storm here. Still believe they are growing earnings by 12% a year. The balance sheet is high, but they have non-core assets that they can sell.

Last year's acquisition because it stretched their balance sheet. They're nowhere close to funding their dividend which they should cut. They lack organic growth and have regulatory concerns.