TC Energy (TRP.TO)

One of the curses of the pipelines is growth because it means that they have to raise capital. They have growth projects with the need to raise capital. They prefer Enbridge (ENB-T) as they came of the other side of this funding need now.

TRP-T or ENB-T? At these prices, he thinks TRP-T is in fantastic shape and the mainline natural gas represents half of the company’s NAV. Within a short period of time he thinks this will decline to only about 10-15% of NAV. This signifies how the company is diversifying – although the stock is a little expensive right now. ENB-T is less dynamic, but he believes their infrastructure is advantaged (as there are few projects being approved) and the dividend continue to grow. You could own both and not be concerned.

He thinks it is undervalued, due to the recent rise in interest rates. He likes the growth potential to participate in natural gas going west into the LNG project.

It is hard to tell if this company has fallen due to the Trans Mountain issues or because of rising interest rates. He expects news on Keystone XL in the fall. Growth in the Alberta natural gas system has good potential, especially if a west coast LNG project goes ahead as they have a virtual monopoly on the gathering infrastructure. An announcement on the project could be coming as early as next week. Yield 5%.

It consolidated, broke down, and is now in a downtrend. It has a reasonable shot to find support at $51; you may get a bounce at that level. Maybe. Consider selling.

Asked to compare Enbridge and TransCanada, he said he currently owns only Enbridge. Both are utility companies. Both pay high yields. Their stock prices are very interest-rate sensitive because interest rates drive the relative value of their dividends and because they borrow enormous amounts of money and interest rates determine the cost of carrying these loans. He holds utility stocks for clients who need steady income but this is, in general, the wrong time to buy utilities.

A dividend stock. He's not surprised that it's been struggling in this interest rate environment. If you've been collecting their dividends, you've done well, but he prefers companies that reinvest their cash. This is a good choice if you want to collect a dividend in the long run and see 9% compounded growth.

These infrastructure companies have become very cheap, because of the poor investment climate for energy. The dividend will continue to grow and the company has not changed. He owns ENB-T for his clients, but would consider holding this. Yield 5%.

He is negative on the other pipelines but this one is a more attractive and more defensive way to play the energy market. They beat on last earnings and have a good balance sheet. There are multiple possible catalysts to move the stock higher. (Analysts’ target: $67.37).

Owned off and on. Whole sector was hurt because of interest rates, high debt. Concern is not enough capital to fund US acquisition. It’s a great business, good long-term income stream, diversified. They own ENB instead, it’s a better valuation.

A yield play with growth opportunity. It has opportunity in Colombia and is not as dependant on heavy oil pricing. He sees 7-8% dividend growth over the next few years. They could also participate in the west coast LNG development. Energy East could also gain some traction given issues with Saudi Arabia. Yield 4.9%. (Analysts’ price target is $67.32)

The pipelines are a hot button issue. He looks at them as a dividend play with some growth potential. This is one of the larger names out there. Others have more exposure to the US. He thinks the divided will grind its way higher. There is some potential for growth. For a dividend oriented investor it is okay. He thinks the energy east pipeline is dead.

With a 14.7 PE and an estimated 9.8% free cash-flow yield and growing at 11% it is safe to buy. Not his favorite name in the space. But offers good value. As long as there is sufficient growth the pipelines compensate for the negative impact of interest rates rising.

(Past Top Pick, July 4, 2017, Down 4%) They have good assets and some growth. They want to raise dividends by 5-7% annually over 5 years, which is why he bought it (and still holds it). He's perturbed about the state of pipelines in Canada though.

It is going to go higher. Very cheap at 14.7 P/E. 9.8% 2019 estimated cash yield. They are growing their earnings. Funding is available for their new projects. 60% stable payout ratio. Dividend yield of 5%.