Enbridge (ENB.TO)

This is a utility. A big company with major pipelines that are going to be full for years and years to come. The real problems occur in areas where you want to expand. Thinks the Northern Gateway is never going to fly, which was one of their favourite projects. Dividend yield of 4%.

Likes this and thinks it makes a lot of sense. The midstream names are a bit of a conservative way to play into the energy recovery if you think that is happening. He prefers something like Pembina Pipeline (PPL-T), which has a bit of a pickup in dividend and pays closer to 5%. Likes both names.

Likes this. It has the best growth of the pipelines going forward. You need some government cooperation to get some of this new stuff built, but they have something like a 5-7 year time horizon for most of their new projects. There will be some disappointments and it will get stretched a little. They are looking for 8%-10% earnings growth for each of the next 5 years, and 8%-10% dividend growth. A little expensive on a PE basis, but in the low $50, it is a Buy. 4% dividend yield.

He likes it at these levels as it was painted with the same brush as other energy names. It was mispriced. It is up about 15% from January, but off of its highs. You have the opportunity to collect that dividend and some share price appreciations. Don’t be in a rush to sell it.

This is a name he likes. Had held this for a long time and was one of the last names he gave up in 2014. It does so well in so many different environments in the energy cycle. It has a $72 target, which is a nice big up move. Above its 50 day moving average, which is really positive. Has started to turn up against the S&P. Dividend yield of 4%.

In the energy sector and it has gotten beaten up pretty badly in the initial stages, but this is a utility. It is carrying oil and will continue to operate its pipelines, both in Canada and the US. The Northern Gateway is probably a dead issue. Thinks the dividend is okay and the company is safe.

The dividend has been growing quite a bit over the last 10 years. They finally accepted that they have to diversify outside of pipelines. The next phase for their growth will be renewable resources, which could hold their stock back. It is safe and secure and it is a regulated utility. Earnings will fluctuate all over the place so you have to look at free cash flows to determine the health of the dividend.

Not one of his favourite stocks. Has a lovely 4% yield, but has a premium multiple, so is open to some disappointment. People are definitely flocking to pipelines and utilities, because of their dependability, and are bidding them up in price. He would not be buying any more at these levels. This would be a Soft Hold.

Has always liked this. It is one of the companies he sold, but is now building back a position. A great Canadian company with really good management. At this price, it is a really good entry point. Dividend yield of 4.2%.

There was a question about smaller companies being able to pay their bills for transport in the pipelines. He sees this as an opportunity in ENB-T. It is one of his favourites. He currently prefers TRP-T at current levels. Longer term ENB-T should do well.

The $40 range was a great buying opportunity. Not cheap, trading at around 23X earnings, but have been able to show that they can grow their earnings. Have a big CapX program going on that they can easily fund without hurting their payout ratio. A very good, consistent company over a long period of time.

Pipelines. Which one for a long term hold? ENB-T is probably the one to bet on. He owns 4 pipelines in his fund. 8% growth profile over the next 10 years, 4% dividend. This is probably his number one for the long term.

We are seeing a downtrend break. It is pretty positive. We would want it to be more robust in breaking out. There is a double bottom, however.

His favourite pipeline. Has the best earnings growth over the next 5 years of 8%-10%. They have said they would increase the dividend commensurate with earnings. He likes both those things. The worry is that as they grow, they do equity issues and debt financing and they keep doing them, and there is going to be more equity over time, which might blunt it a little bit. Dividend yield of about 4%. Would add at under $45. Thinks it will be in the mid-$50 by the end of the year.

If you look at the history of busts in the oil industry, when there is a bust like we have had you generally don’t see the market bottom and then turn around and take off and not come back. In the 80s once and in the 90s once, oil dropped 68%-69% over a course of about 1 year. In both cases you had an approximate 50% bounce off the bottom, and then the industry had to consolidate for many years to work out excess supply and excess costs. We have had a great bounce in a lot of the stocks, which is given a lot of people an exit opportunity. He would prefer to focus on things that benefit if prices stay relatively low.