Inter Pipeline (IPL.TO)

DRIP programs? You sometimes get incentives to take these with a little bit of extra percentages. He prefers to take all of his dividends in cash. It is a way for him to reallocate funds. However, for most investors, a DRIP is a decent way to stay invested and get the compounding effect going. This company is one of those companies that offer the DRIP. A great company and has owned it in the past. A little bit more exposed to oil and oil sands projects then some of their peers, but by and large, their customers are going to stay in business, so the volumes will be there to transport.

(A Top Pick Dec 30/13. Up 42.4%.) If we got into oil at under $60 for a couple of years, the pipeline growth would certainly slow down, but not sure that they would go into decline necessarily.

(PPL-T and IPL-T) It is too soon to get into it. Mid-stream players saw their valuations go way up in the search for dividends. Then they moved up higher because of the growth rates. But only a portion of the projects are secured. There is risk that the valuations could contract.

Has been a core position for a long, long time. Trimmed it a couple of times. His measurement on yield plays is that if he gets a yield, he then looks for at least matching growth to give him over 10%-12%. If he can’t get that, then he is really not that interested.

(A Top Pick Nov 6/13. Up 38.74%.) Thinks that the long-term story for energy infrastructure is intact. You are probably going to get 8%-10% dividend growth for the next 5 years. For this company, it is a necessary piece of infrastructure for the oil sands in Western Canada. It would take a sustained period of very low energy prices for them to curtail their investment. They have very long contracts.

(Top Pick Nov 25/13, Up 40.53%) As you see the increase in utilization of existing pipelines you will see further dividend growth. 14-15% return is pretty good. Keystone could provide even more potential for dividend growth.

Pembina (PPL-T) or Inter Pipeline (IPL-T)? Every investor in this country has to own one or the other. Charts are looking really good. Pembina has outperformed this one year to date.

Recommended for a 3-5 year Hold? He likes this company. Other companies would be worse off than this one, if interest rates were to rise. This is a company that is growing, more so than other dividend paying companies. A good company for a 3-5 year Hold.

His largest holding. Had terrific earnings 2 days ago and increased their dividend by 14%. The company is still about $3 below their high. Likes their growth and that they share earnings with the shareholders, in terms of steady dividend increases. This is a good one for the long haul.

Several criteria for tonight’s Top Picks are for solid assured cash flow growth and subsequent growth in distributions. There have been both with this company. This is basically a business that is involved with Take & Pay contracts for a major part of the business, or cost of service plus. Given the business that they have currently on the books, you are going to see a major increase in cash flow per share of about $1.40, and probably see 30% of that added to the current distribution. Feels the pipeline business in Canada is a growth business. Very good value. Yield of 3.68%.

The mid stream sector took a massacre in the last 6 weeks. Some had very high valuations, but they got sold off much too much. He likes them. Less commodity exposure. They are attractive to buy right now.

Which pipelines should he buy? His favourites have been in the juniors, Pembina (PPL-T) and Inter Pipeline (IPL-T). Likes these because they operate virtually all in Alberta and somewhat in Saskatchewan and BC. They don’t face the kind of political problems that the larger ones do. Will probably show better growth in a reasonable market and he would say either of these 2. They give reasonable dividends and good growth potential.

Very well managed company. Conventional oil pipelines and natural gas liquid extraction. A lot of their projects are just beginning to come on line now. As a long-term investor, he would certainly be looking at this. Feels the dividend is fairly safe.

Getting to a certain scale where it is harder to move the needle with their growth, but they definitely have growth potential. Operates within Alberta, which is why he likes the smaller companies as they don’t tend to cross the borders.

He was trimming pipeline shares a week ago. They came off pretty strong. If you are underweight in these stocks, they have the best growth profile ahead of them, so accumulate during dips because they don’t stay down for long.