TC Energy (TRP.TO)

Does not own shares in company.
Recent cost overruns with Coastal Gas Link program an issue.
Long term is a good investment, but short term will be volatile.
Current valuation is an attractive based on stock price.
~6% yield is solid and attractive. 

He owns a starter position and would like to add. Market is skeptical, so you might be able to get it at a giveaway price. If you're building capex, the market's nervous. Coastal GasLink is massively over-budget, unlikely the company will build one of these again. Lots of project potential in eastern US through gas and infrastructure. Would be highly surprised if 6% dividend gets touched. Defensive.

Clients own it but he is not overly positive on utilities in general at this point. Costs to build new structures are out of control. However what they have is valuable because of this. Rising interest rates make the dividend less attractive.

Two completely different sectors. First questions are what's already in your portfolio and at what weighting? Similar dividend yields and similarly disappointing to investors in 2022. BNS has had poor performance for quite some time, and now a leadership change. TRP has a good, strong management team, but cost overruns. At these levels, he prefers TRP -- underlying business doing quite well, core fundamentals extremely strong, project issues will get solved though investors may have to wait a bit. Opportunity for total return is pretty great over next 10 years.

Share price hit today with announcement of cost overrun on a projected. Inflation is having an impact, plus labour costs soared. Project is 83% complete. High quality, attractive returns. Safe, stable balance sheet. Attractive multiple of 13x. ENB, for example, is at 19x. Yield around 6.5%.

Distribution for gas and energy, plus owns 7 power plants. Share price down due to material cost overrun, a buying opportunity. Company will get through this temporary issue. Trades at 13x. Plenty of room for stock appreciation. Yield is 6.59%, double that of the TSX, but same valuation as the market.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research.

TRP came out with a cost estimate to finish the Coastal GasLink projects, and costs have soared. 
Material cost pressures have increased the capex estimate to $14.5B. 
If the project is delayed into 2024, another $1.2B. 
The company has warned on costs before, and now estimates are double the original cost expectation. 
We do not expect this to impair the dividend, and with the drop yield is approaching 7%. 
With the decline already in the price, we would HOLD. Unlock Premium - Try 5i Free