Enbridge (ENB.TO)

It had an uptrend from ’09 to last summer. We had an uptrend and then it broke down. He thinks now it will be dead money, but you won’t get hurt. There is a little increase in volume. If we get above $46 with volume that is positive.

Just raised their dividend by 14%. Has relatively good growth. Remember that this is a provider of services to the energy industry; they don’t suffer directly from the commodity itself. They get a fee for service for tolling hydrocarbons through their system. It’s a good company, but there is just not as much growth as there might be in a healthcare or technology stock. Good yield play and shows good growth. Dividend yield of 4.8%.

Likes this and is putting new money in for new accounts. Has been a great stock longer-term. They have some major projects on the books of about $21 billion, with about all but $5 billion being internally funded without having to go to the market. They are talking about a 14% annual average growth rate out to 2018. If you are looking out 2-4 years, this is a great buy. Dividend yield of 5.16%.

Decline in share price picked up speed after Kinder Morgan (KMI-N) cut their dividend. A lot of institutional money managers are starting to question if Enbridge will be cutting their dividend. He likes this company and continues to hold it. Thinks the dividend is safe.

A wonderful company, great management and a good solid dividend. Sold his holdings because he thought that coming into the summer, pension funds who were buying it for the dividend, would be starting to sell. With the correction that we have had in a lot of the names, he is starting to look at coming back in.

Mastered Limited Partnerships were very popular for a while, but have been under a lot of pressure over the last year or 2. Feels this company has been dragged down with that. Their revenues are largely contracted so there are not real issues in the short term, but the multiples have been compressing. They have lots of growth prospects in pipelines, but people are worried that they’ll need to raise equity and the plans will get shelved which brings down the multiple. Reasonably priced, but it is going to take a change in sentiment before it turns around.

This is not in a good situation. Best not to add to it. Perhaps look at it in January or February.

He has been negative on pipelines for some time because the valuations are excessive. Then on Friday he bought TRP-T. He is positive for the first time in 5 years. They are starting to come down to arrange where they are safe for investing. This one is still a sell, though.

How they have structured their business is really tricky, and he has yet to find the answer.

Enbridge (ENB-T) or Toronto Dominion (TD-T)? TD is the one you should buy. This one has turned into a financial engineering exercise. It is a pipeline company that is pushing investments down into special-purpose entities, and it has a huge financial restructuring that is going on. Putting incredible strain on investors. If and when interest rates were ever to rise or there is a real change in energy consumption patterns, this could have a lot of strain.

Owns some of this in some of his income accounts. A very well-run company and very profitable. However, it has projects that are not getting approved or are being delayed, and that is starting to hit into its growth. As the worry of interest rates starting to go up comes along, people are moving money out of those interest sensitive stocks and into more cyclical names that will benefit from an improving economy. This company will be hurt by rising rates.

3.9% dividend. Is a large company, an energy infrastructure company with assets in the US and Canada. Just acquired an energy asset (wind power) in the US. The valuation is always the problem. The valuation was driven up and he sees better valuation elsewhere. It is okay on a pullback. There is a limit on how much he will pay for this.

Versus Enbridge Income Fund (ENF-T)? For both companies, safety of capital and dividend is there. They have the projects in place in their backlog for the next 3-4 years. She expects that cash flow is going to grow in the 10%-15% area. Dividend growth will be at that same pace, if not slightly higher.

Debt levels to equity are way too high for his portfolios. He is a little concerned about how they have low interest coverage at this point. A great, stable business, but paying out a little bit more on the dividend, so the payout level is high. They either have to grow the business or cut the dividend.

This has been one of the better managed of these companies. The multiples on these companies are fairly high, and this one is in the middle. If it were to correct by about 15%, he would take a serious look at it.