Keyera Corp (KEY.TO)

(A Top Pick January 23/17 Down 6%). He wants to own gas infrastructure for years to come, but there is no sex appeal in holding this now. A year ago it made sense. Going forward he thinks they are in great shape.

A solid base at $32. Fundamentals aren't great but it pays a 5% dividend. Not an oil/gas co. but a midstream distributor and processor. Chart shows a potential to return to $36-37. There's enough trading support since February. A dividend, short-term play with potential to rise a little higher. (Analysts' price target $41.00)

They have a durable cash flow that can compound over a multi-year period. They have 2.5 times debt to cash flow. It is finally really cheap. Low payout ratio, 4.9% dividend. (Analysts’ target: $41.00).

This company ranks 286 in their database and they do not hold it. There is some concern on future earnings. It is a high-yield company with only a 55% payout ratio, so he feels the dividend is safe. Overall, the debt-to-equity ratio looks reasonable and it is a good hold. If oil prices rise, it will appreciate. He thinks there are better opportunities. Yield 5.2%. (Analysts’ price target is $41)

He prefers companies like Keyera to companies like Enbridge. KEY has reasonable level of debt, great cash flow visibility and a growing cash flow stream over time. He also thinks the management team is aligned with shareholders.

Infrastructure stock. Her preference in this space is Pembina Pipeline. Nothing wrong with this stock. (Analysts’ price target is $41.20)

It is the best of breed midstream company over the last 15 years. They lowest debt level and lowest payout ratio.

Fallen out of favour recently, trading at at a five-year low. Terrific dividend grower with good projects in the pipeline, so to speak. He thinks it's down because of fear of rising interest rates, which is near-sighted. Good management. Great time to buy. (Analysts' price target $42.64)

People are concerned about interest rates so this one has come under pressure. He is chiefly interested in the yield and its increases. He also wants to know what is the value and what will the growth be. KEY-T has a number of projects underway which will increase the size of the company and they will lead to even more dividend increases. Focus on the value and the price will take care of itself.

Just did a big equity issue of more than $400 million, and some were surprised by that. Generally speaking, the group has been a bit soft with the volatility in Canadian crude oil/natural gas prices. In this environment, you just ride this out and hopefully the commodity price improves.

Oil is a structural macro problem for energy infrastructure companies right now. Trading near its lows, as is the whole group. From 2009 through 2014, prices rose for oil, volumes grew dramatically, dividends grew dramatically, and energy infrastructure companies went from 6X earnings to 24X earnings, and then the bubble burst. Stocks are reflecting that growth will not necessarily be there.

He lumps it into the bond proxy bucket and so does not own it. He would prefer ENB-T because it has an element of growth – a high dividend close to 5% and an explicit plan to grow the dividend 10-12% a year. You need this to avoid multiple compression.

(A Top Pick June 21/16. Up 7%.) He still likes the name. A very well-managed company. Conservative debt metrics. Provides good income.

(Top Pick Apr 12/16, Down 3.13%) This is a good income pick for people. You don’t buy it because the stock price will double. Don’t buy the horses, buy the race track. No matter what, it has to go through a KEY-T facility regardless of whether the price of oil goes up or down.

One of his top picks has better bottom line growth. This is not in a terrible industry and does have some growth, so he thinks it is okay to hold. There are better choices, but there are way worse choices. (See Top Picks.)