TC Energy (TRP.TO)

It passed Enbridge but has sold down quite a bit in past weeks. Past decade has seen consistent revenue growth. Had blacklog of $24 million worth of projects that will come online in three years in the U.S. and Canada. Will access to U.S. shale. Predicts 10% earnings growth and dividends continue to rise. Expects Keystone to get built. (Analysts' price target $71.35)

4.9% 15 1^st Preferred. (A Top Pick Feb 2/17, Up 0.93%) When they re-do their issue it will come with a 3.8% spread. This is a fixed rate reset. It has a floor yield 4.9%. Where income and capital preservation is a focus this one is great.

Sell? The price has pulled back a lot, and he thinks it is going to underperform the market for some time. (See Top Picks.)

All the energy infrastructure and pipelines have pulled off a little, with higher interest rates. There is commercial support now for Keystone, which gives another $2-$6 to the stock. Even without that, he sees this probably going to $72 over the next 12 months. The company indicated they are going to grow their dividend 8%-10% out to 2021. 60% payout ratio. He models 8% earnings per share growth. On these higher interest rate concerns, you can be buying at this time, or better yet, Sell a Put and oblige yourself to own it at $55 and get paid a nice little premium. Dividend yield of 4.3%.

If prices go back up to a certain level, people start selling to make themselves whole if they had bought at higher levels previously. This is exactly what is going on with this. You have over a year of investors being underwater. Unfortunately, he believes the next move is lower.

For a TFSA? Good company, steady, nice dividend. They've grown their dividend over the years. An appropriate investment. Expects it to grow by share price and dividend by about 8%-10% a year for the foreseeable future. It would be better in an RRSP or RIF account. Investments with a higher possibility of a rate of return, should be in the TFSA, and companies like this with a fixed income, really should be in an RRSP or RIF.

Over the last 2-3 years, this has had a pretty good run. Had a pullback in the last 6 months, but longer-term it’s a good opportunity. Pipelines tend to be more stable assets that benefit you when the market goes down. When we go into recession, these assets will hold up because it is a pretty steady business. A lot of institutional managers are taking there weighting down a little, so in the short term there has been some pressure for underperformance in the sector. Long-term, this is a good sector to invest in.

Pipelines? Canada is producing way more oil than what we can get out, so there is a long-term demand for pipeline capacity. Because of a tight Canadian market, they are expensive on a global basis. This has made big US acquisitions, because US companies are cheaper. The outlook for projects in all these companies is very strong. You should be fine in any of them.

As bullish as he is on increasing rates, and rates are going up, this sector will be hurt more than any other because a lot of interest rate refugees have kind of pumped the valuation of all of these stocks, including telephone utilities. Valuations doesn’t make a whole lot of sense. There is a lot of pressure on these stocks going forward. He wouldn't touch this until it went down to $41.

This was a top pick because he wanted to keep the betas low, just in case there is a market correction any time in the next year. All the talk is about Keystone and their oil pipelines, but nobody is really paying attention that this has been accumulating a lot of gas pipelines and gas assets. Natural gas prices have been in the toilet for a long time, and that bodes well for them, because it is going to be the less pollutant, cheaper choice for the US moving forward. The dividend has been growing roughly in the 10% range which he expects will continue. Dividend yield of 4.2%. Trading around 20X PE. (Analysts' price target is $72.50.)

Hold or Sell? He likes this here. They have a lot of good irons in the fire. They are suggesting an 8%-10% dividend growth out to 2021. 18X 2018 is not bad for an 8% EPS growth. He would prefer Enbridge (ENB-T) right now, but this is a fine name.

The pipeline space is quite stable. Their plans are quite good. He could only own so many names in the space. He prefers PPL-T because they are diversified more into the mid-stream and infrastructure spaces.

He plays the energy/pipeline space through Pembina (PPL-T) where he sees a better growth profile. Likes their backlog of projects and the 5% dividend yield. Also, they are diversified amongst different commodities. Doesn’t think you will go too far wrong owning TransCanada.

(A Top Pick Sept 15/16. Down 8%.) *Short* (Pairs trade with a Long on TA-T.) He still has both positions on.

(A Top Pick Nov 2/16. Up 13%.) Has been reducing this because you own this when you want to be in energy, but in a chicken way. At this point, there is no need to be defensive, and she would much rather own producing names.