Inter Pipeline (IPL.TO)

(Market Call Minute.) She likes the yield. They just announced an acquisition of the Williams LNG plant in Canada. Tends to be pretty good operators. Good yield.

One of his biggest holdings. Just acquired Williams Company assets, which was a great acquisition. They paid $1.3 billion Cdn. It makes them stronger. Feels the dividend is safe.

Likes this as a way to back into the energy market out west. You get a good dividend (5.72%), and it doesn’t have the same problems as the major pipelines. They have good, long term contracts with big producers. This is a quasi utility. Good management. Made an acquisition that is going to be accretive.

Seasonal strength for energy is from Jan/Feb all the way through to May. Pipeline stocks can still do well in the summertime, because higher yielding companies tend to be more cushioned against summer volatility. This has held up well, but along with everything that has a higher yield, they have become a bit exhausted. The next move is potentially lower. Yields are attractive. If it did pull back, it would be to the 200 day moving average at about $24-$24.50.

A provincial pipeline in terms of servicing mainly Alberta, BC and Saskatchewan, and not into the big political problems. Pays a pretty reasonable dividend. They service not only the regular industry, but the oil sands industry, which is part of the problem that he sees developing. With oil prices back into the $60 range, he doesn’t really see the long-term growth developing in the oil sands until prices get higher. Not a bad investment in your portfolio, simply because they produce a good cash flow.

(Market Call Minute.) Going to be very sensitive to interest rates and volumes out of Western Canada. Wait to see what happens to interest rates.

Pays a reasonable dividend and has good prospects of increasing the dividend over time. This is midstream, which is still a growth area. Well-managed company.

The dividend on this is definitely safe. A good company with a solid asset base. He would qualify this as a Hold as the valuation is up there. The problem is that their growth outlook is probably the lowest it has been in many years. They may do more acquisitions in Europe, but other than that it is getting tougher for them to generate more growth.

(A Top Pick April 27/15. Down 24.5%.) (This was not discussed by BNN, but I calculate that it was down by 80.3%. Bill)

This has a yield of over 5%, and thinks the dividend is safe. A couple of years ago this had a fairly strong cash flow growth profile, but that is largely behind them now. They have excess capacity on their existing pipeline, which will add cash flow, if they can fill it. For now, the dividend is safe.

This is a good business. Prefers Keyera (KEY-T), which is an area where you have better valuations, better growth, better management and better dividend coverage ratio. If worried about volatility, he would go into Keyera, but if you want better torque to the upside, he would go with this one, because of increasing oil prices.

Pembina Pipeline (PPL-T) or Inter Pipeline (IPL-T)? Payout ratios are creeping up on both. Also, they are not as tied to commodity exposure as some of the other pipelines. However, it ultimately comes down to how good their counterparties are, or how good the shipping contracts are. They are getting expensive again. Probably got too cheap. At these levels he would probably be looking to taking off exposure.

With the “take or pay” agreements which typically underpin a lot of energy infrastructure companies, they are only as good as a credit quality of the customer. In some of the MLPs in the US, customers are buckling and going under, and you have to question how sustainable the cash flow is on companies you are buying. He is not particularly concerned with this one as it focuses more on oil sands. Prefers Pembina (PPL-T). Dividend yield of 6.1%.

Compared to Pembina (PPL-T) and Enbridge (ENB-T)? One is more of a regional player and one is more of a national player. It is hard to compare to Enbridge which is the national premier pipeline company. This has a solid yield in the 6%-7% range, where Enbridge is much lower. They are all fine. One issue you need to be aware of is that it sells off when commodities are weaker. The name is fine.

6.3% dividend. It has been hurt more during this downturn due to oil sands exposure. The dividend is sustainable with current projects that have been delivered. He sold in 2014 because he was so overweight the space. He has been adding to this sector recently.