Inter Pipeline (IPL.TO)

Energy infrastructure is the most defensive part of the energy market. But you are running into a headwind. Supply lines might slow and you might see less dividend growth. There are more attractive sectors that benefit from lower energy.

Was nervous about this because it was oily with heavy oil, but spreads are now a lot better, so the outlook in the last 2 months is better than it has been for the last couple of years. There is enough growth in that it is a Hold, but don’t expect 10%-15% growth.

Got hit a bit because of the drop in oil prices. It beat its numbers last quarter and is in the right growth profile. One of those great managed companies that not only manages its assets well, but is a pipeline that is not being interfered with. On a valuation basis, it is cheaper than it was 6 months ago but you still have the growth profile.

It is expensive on a price earnings basis, but they have so much locked-in growth. A lot of their projects are based on long term projects set up years ago. Expects the dividend to grow going forward.

Has owned this for quite a few years, and it has returned 10% dividend growth through that time. Dividend yield of 4.8%. Just had a very good quarter. A rock solid company. A bit diversified. They do very conservative pipelines. They don’t build them on spec, but only when they have a “take or pay” contract. Also, have some oil storage in the Danish Straits. Not affected in any big way by the price of oil.

Stock vs. Stock. IPL-T vs. PPL-T. Both are excellent companies. The Alberta election has some negative implications for these. PPL-T has the better risk return profile going forward. Both will grow their dividend single digits.

(In his 3 top picks, he was looking for companies that would grow cash flow and increase dividends.) Has a price target of $35. We are going to see a continuation of the growth in pipelines for oil sands transportation. He is looking for much higher dividends over the years. Yield of 4.7%.

Likes the pipelines as a group, because she does not think energy prices will stay low for a prolonged period of time. For the next few years, their cash flow is quite visible for projects that are in place. Just coming off a very strong capital spending cycle from last year. They are not at full capacity, but they are all backed up by long-term service agreements, so it is very defensive. She still likes this.

Holding on to his holdings because of the dividend. Also, they have long-term contracts with a number of very large producers. Some of these oil sands projects are still coming on and haven’t even started producing. This company is closely linked to these. The next 2-3 years still looks like there is good growth and good cash flow. By that time, the price of oil will be back into a more reasonable level.

This is her biggest holding. It has been hurt like the whole energy infrastructure space. Mostly concentrated in the oil sands, so their growth is predicated on continued growth in the oil sands. They are going to see a really big bump up in their EBITDA year-over-year from last year, because they are bringing on Polaris and Cold Lake pipelines. 80% of the stock is held by retail investors, so they will be happy with the EBITDA lift. She expects there are going to be more dividend increases over the next few years. In terms of the next leg for oil sands growth, we are going to have to see what happens with commodity prices and new project announcements.

He is Short this stock. Trading at 27 or 28 times earnings, so very expensive. You need to see growth rates of 10% for the next 5 years for that to come in at an “average” price stock. His bet is that a year from now this will be significantly lower.

She would be buying it here. They are a smaller pipeline company in Western Canada getting strong growth out of the oil sands. The dividend is safe and they had attractive growth over the last few years. Growth and dividend growth may not be as strong as previous years, but the dividend is safe.

(Top Pick Feb 24/14, Up 22.06%) His favourite dividend paying stock. They have 20 year contracts and have minimal exposure to commodity prices.

He sees tremendous volatility associated with the price of oil, even though pipeline companies like this don’t have direct commodity risks. Oil still has to get the refineries. People still have to heat their homes. That is not going to stop even if oil goes down to $30 a barrel. When these companies are being sold off, look at it as a buying opportunity.

End of January to spring of each year is the period of seasonal strength. This one has followed the trend of the energy sector rather than the utility sector. It is probably a good time to get in at the end of this month.