TC Energy (TRP.TO)

(Top Pick Feb 5/16, Up 30.97%) The whole sector was starting to break down. He does not hold this one anymore. He now has ALA-T and SLB-N.

This has had a fantastic run over the last year or so. Pretty much everything has gone right for them. He would prefer a better entry point. Has been trimming his position over the last 6 months. The long-term dividend growth rate is going to be in the 8%-12% range. The Columbian pipeline acquisition looks really good. 3.2% dividend yield.

TRP.PR.K-T. 4.75% yield. The VIX is about as low as it has ever been. Where do you park money when you are concerned. This has a floor yield. Some reset preferreds got reset at lower and lower rates. 5 years when this one comes up for renewal it will still be at a 4.5% or higher yield. It is a wonderful alternative to fixed income. The company could buy them from you in 5 years, but not until then.

Trans Canada (TRP-T) or Enbridge (ENB-T)? The pipeline stocks have got a little bit of a boost from Mr. Trump. Energy stocks in general will probably do fine. Feels the big rally in energy prices will probably peak out around here. He doesn’t see oil prices going to $70-$75. Doesn’t think either one of these are going to particularly be barnburners, and both have reasonable dividends. Thinks the pipelines are probably the more favourable of the 2.

(A Top Pick Nov 11/16. Up 7.43%.) This has done well on the back of the Keystone XL story. Moving forward, that opportunity should unlock more growth for the company. Canadians badly need a pipeline to the West Coast.

Enbridge (ENB-T) or TransCanada (TRP-T)? These are both great stocks. Enbridge is a little more expensive at 24X with this one at about 22X. This has some issues on Line 3 with regulators in the US, as to whether or not it goes through. Both have good growth, but Enbridge has the better growth over the next couple of years. He likes the Keystone element and thinks Trump is going to put that through.

TransCanada (TRP-T) or Enbridge (ENB-T) for a 10-year hold? Both companies have done something very interesting by making big US acquisitions. He likes Enbridge because he thinks there is some very good growth and management has been spectacular. Management in this one has not been as consistent.

Great management team. Reasonable valuation to the peer group. There is going to be a lot of pipeline that he is expecting to come online in the next number of years. There is about $25 billion of infrastructure that has been spent, and will be coming online, probably within the next 2 years. There is another $45 billion that is likely coming on in the next 5 years from there. A huge amount of growth in that space. The company has said that they are likely to increase dividends at a 10% clip over the next 5 years. We are also likely going to see Keystone approved. Dividend yield of 3.64%. (Analysts’ price target is $68.31.)

Similar seasonality to oil. The stock has formed a trading range for the last 6 months. If it breaks the trading range it should get to $69, but wait for a confirmation of a breakout where it getting above the resistance level around $61.

Probably one of the beneficiaries of the Trump’s presidency. Trading a lot cheaper than Endbridge at about 8.5%. Just had a large issuance that was slightly dilutive. Their payout ratio is about 47%, while their peers are at about 70%. Thinks they are capable of dividend growth of 8%-10% each and every year through 2025. On a little bit of a pullback you want to be constructive on this.

Will Canadian large cap bilateral companies move to the US with Trump’s dropping of corporate taxes by 15%? These are things that are over the horizon. If it begins to go that way, the Canadian government will have to react. Canada has managed to be lower than the US previously, and we don’t seem to be that concerned about deficits. We have to be competitive with the US on things like this. Thinks our government will react. Feels this company is going to be a big beneficiary of Trump.

The key story here is that they have repositioned the portfolio fairly recently. Made an acquisition, raised some capital, and are going to lock in 8%-10% dividend growth through 2020. Dividend yield of 3.84%. The type of company you just buy and put in your portfolio, and it will continue to reward. (Analysts’ price target is $67.13.)

*Short* half of pairs trade (Top Pick Sept 15/16, Up 1.60%) It is a very levered company. It is excessively valued. This does not make sense in a rising rate environment. The story is Keystone XL, but it would require a lot of Cap-X.

(Market Call Minute.) Most pipeline stocks are selling at very high multiples right now, but they tend to produce very great cash flow, of which they pay a lot out to shareholders. If you think some of these pipelines are going to be approved in Canada, which he does, it is reasonable to hold onto them, because in the meantime you can live with a yield they produce.

If Hillary Clinton wins the election, she thinks pipelines will become more valuable, because it is not expected that she will he be approving any new pipelines. TransCanada has just made an acquisition in the US as there are not going to be that many new pipelines developed in Canada. 5-6 years down the road, those existing pipelines will be even more valuable. Dividend yield of 3.91%.