Enbridge (ENB.TO)

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.

Has been a tremendous creator of wealth since its issue in 1952. It is rare that you get a pullback in the stock price, but this recent one is following a 33% dividend increase this past December, and he is expecting another 15% increase this year.

Reduced his position, but is looking to buy it at $45. You may see it in the next little while given all the issues going on in Calgary. This company has great prospects and has great growth and a very sustainable dividend. Try to buy this between $45 and $50.

He would prefer TransCanada (TRP-T) on a shorter term basis. Has exited the pipeline side of things, so doesn’t own either.

This is doing an A, B, C correction and it has a ways to go down yet. If you own, don’t add to your position. If you own, just stay with it and live through this next corrective period.

They missed today, due to 9 line delays. However, their long-term guidance has not changed. Probably the only pipeline that has contracted growth for the next few years. Not expensive relative to the group. All the pipelines can continue to come down the longer oil stays lower. If this falls enough, then it is buyable.