Enbridge (ENB.TO)

Thinks this is fully valued. Has been a great growth story for years. Continues to perform fantastically well. As the pipeline business gets more and more complicated from a regulatory and First Nations perspective, these pipes are aging. Maintenance costs are going to increase. The risk is, as we are not able to build new pipes, the old ones sprout more and more leaks.

Has been a beneficiary of people looking for yield. The market is not pricing in the North Gateway pipeline going through and if it does it will be a bonus. Lots of other projects will bring them earnings growth, but he thinks the best is over for them. Payout ratio is good so the dividend is safe.

Short Has had a Short on for about 3 years now. Had completely underestimated the skepticism of this market and how it was looking for a defensive, dividend growth. Trading at almost 25X earnings. They’ve had some really aggressive dividend raises of 5%-10% over the past 3 years. However, with that, they’ve also had capital raises. It makes no sense to him why a company would increase its dividend, and at the same time, go and issue more shares.

Northern Gateway – where do you see it 5 years from now if that pipeline is built? It is not that cheap, but they have 12% growth rate for years to come. He upgraded his target yield. Good dividend growth, but it is pricey. Thinks Northern Gateway will go through and that Obama will approve Keystone XL. These are priced in at this point.

(A Top Pick June 11/13. Up 18.21%.) This has 8%-10% earnings growth over the next 5 years, plus the dividend.

(ENB.PR.D-T) 4% Series D Preferreds. This company has a whole bunch of 4% dividends and a whole bunch of 4.4% dividends, because of where credit spreads have gone. This one will pay you 4% until 2017, when it will reset at +2.37% over the then 5 year Canada. He can see a dividend increase when it comes up for reset.

Has had a big, big run. Well-run company with lots of big growth projects. Well-financed and able to raise money. Wish the environmentalists would let them build the new pipeline so they could take their old ones out of service with all the leaks. Not cheap. If we ever go through an interest-rate shock, it could be bad for these companies that have a high leverage. Paying out 70% of their earnings in dividends now.

His model price is $32.01, a negative 38%. However, he sees the TSX putting a push on to go higher, which would bring this up to $57.

Great looking chart. Whenever a stock arcs off of a trend line, it could come down. Typically energy stocks are seasonally in a weaker period over the summer so you could expect a little bit more pull back and he would use that as an opportunity to Buy more.

Owns a lot of their preferred shares. Likes the company and the space and utilities. Irreplaceable assets. Has been one of the top performing utilities over the long-term. This is probably one that you could put in your portfolio and never look at again in 30 years. You would do very, very well. Likes what they are doing and likes the growth in demand in oil/gas space in Canada/US. This is a place you have to be in. (See Top Picks.)

Preferred series F. Likes the company. In the preferred share markets it is a solid P2. Have great capital plans. Have 12 or 14 issues in the preferred share market. Most of them are at a 4% coupon. This will come up for reset in 2018. The reset spread is 251 so at that time you will get either 5 year Canada +251 basis points or T-bills. Most likely it will be called in.

Preferred Y 4% Series 3. This is a rate reset and will go to reset in 2019 with a reset spread of 238 basis points. Trading a little over 4% currently with a 4.5% yield to reset.

(A Top Pick June 11/13. Up 22.46%.) This should be a core holding for most people. Had just gotten hit with all the interest sensitive ones in May so it was really on sale.

When he bought this last fall, it was trading at something like 21X earnings and is closer to 25 times right now. This tends to be the upper end of the range. He would be patient. Likes the fundamentals very much for the next 3-5 years. If you own, continue to Hold.

Likes it. He has not been buying recently because he would like to see a pullback. The keystone pipeline is dead until at least the next administration.