Enbridge (ENB.TO)

This is a good example of how seasonality works most of the time, but not all of the time. Historically it does very well between now and about the 1^st week in January. This year, not so much. It has a long-term upward trend, but during the last month or so it has been trading below its normal level. Currently it is going sideways at a time when it should be going higher. Not one of his favourite situations. Any sort of strength in the next little while would be an opportunity to take some money off the table.

It scores really well on price momentum. The problem is that their valuation is high. This keeps him from being a buyer. 25 times PE. They always have a lot of debt. They missed on their most recent quarter. They should be sensitive to a rising rate environment.

It is his favourite pipeline. They are going to grow both earnings and dividend by about 10% through 2022. You have to look for one of these that has growth and earnings. As rates start to go up you want one with growth and this is the growthiest one.

He likes pipelines. This pays a nice dividend, and there are some nice growth prospects. They made the purchase of Spectra which will be closing in the next little while, which will add to the revenue stream, probably for the next 5 years.

They’ve had a pretty aggressive dividend increase program based on existing projects that have been fully funded. If the dividend goes up as they have planned in 2019, he would be picking up a 5.07% yield with Book. If the planned dividend increase continues, in 5 years the yield with book would be 6.07%. Besides that, this new powerhouse energy firm spanning both countries, is going to ease the problem of interconnecting lines from Canada to the US. Dividend yield of 3.64%.

It was primarily a crude oil transportation company, but the Spectra Energy acquisition gives them 50/50 Nat. gas and oil exposure now. There is no commodity risk and they have long term contracts in place. They have a 2.7% yield, although not the highest in the group. They have visible cash flow growth going forward. They have projected 10-12% dividend growth for the next 9 years and she expects share price appreciation.

This is a well-run company, it is a utility and is going to continue to do well in the long run. The dividend is safe.

They suddenly have come back into major league favour after being in the penalty shed for 18 months. At the beginning of this year, things started to look a little better for them. This has always been a well-managed company and is finally bearing the fruits of their labour.

There have just been some construction halts on the Dakota pipeline. Thinks it is going to get built, but the risks have gone up. They just did a major deal, which in the near term is dilutive, so he just lowered his 2017-2018 by about 2%. He models 10% EPS growth for the next couple of years. Now that they have just combined with Spectra, they have better growth beyond that. This also helps their balance sheet and addresses funding needs. This is expensive like all yield names, trading at 24X versus its 5-year average of around 26X. It is still cheaper relative to where it has been. This is one you want to continue to Hold, or buy on a pullback.

He owns Spectra. He is receiving shares for that. He thinks pipelines are a great business. He will hang on to the shares. They have great assets. It is a tough business to build new pipelines. These are great income and cash generating businesses. This is a monster of a player in North America.

Fortis (FTS-T) versus Enbridge (ENB-T) versus Telus (T-T)? He has just come out with a new portfolio which has 13 infrastructure oriented stocks. All 3 of these are in that portfolio. The major reason is because of the predictability of dividends long-term and excellent management. He really likes the Spectra merger, which extends out the time they can forecast their dividend growth, which will be 17% next year and 10%-12% per year to 2024.

He really likes the Spectra acquisition. The only potential negative is the earnings multiple which is in the almost mid-20s now, so there are some interest rate risks. If you Buy it and tuck it away, you see the dividend grow to the point where it will double in 7-8 years. There is a strong emphasis on renewables, they are the 2^nd largest wind producer in Canada. Have done a large joint venture with a French organization.

A good, long term hold. You can get fussy with valuation and try to get cute, but it is a name you just want to Buy and tuck away for 5-10 years. The assets are very difficult to replicate. The Specter deal helps them securing mid-single digit cash flow and dividend growth for the foreseeable future.

He is not short. There has been a chase for yield for 5 years. It is incredibly expensive where there is no organic growth at all. Their debt is getting up there.

Inter-pipeline (IPL-T) or Enbridge (ENB-T)? Their acquisition of Spectra gives them more visibility on dividend increases through to 2024. Dividend yield of 3.7%.