TC Energy (TRP.TO)

Acquiring Columbia Pipeline Group (CPGX-N) for US$10.2 billion. This is a good deal for them. They are also selling their facility that supplies New York City, a stake in the Mexican gas pipeline as well as making a $4.2 billion capital raise. If Energy East doesn’t get built, it doesn’t matter too much to them, as this deal is going to be earnings accretive next year. They continue to raise their dividend 8%-10% a year through 2020.

Just acquired Columbia natural gas pipeline. This was a really strategic move to diversify away from Western Canada. His initial thought was that it was a statement on the prospects for Western Canadian gas, but looking out 4, 5, 10 years there has been so much growth out of the US plays, which have gone from next to nothing to 17 billion feet a day, that they are at risk of crowding out Canadian gas.

Pipelines? He added TransCanada (TRP-T) recently. Has not liked the pipeline sector for a while, simply because of valuation. You’re still looking at single digit growth in the industry along was some worries about growth projects going forward. However, stocks came down pretty dramatically. This is probably the best financed of the pipelines. Not hugely bullish on the sector and wouldn’t be putting money into any of these today.

A good place to get back into. It sort of represents a “1^st in/last out” philosophy. The downtrend has been broken. They are trying to focus on liquid gases to diversify bases a little. Has a really nice dividend. His target a year from now is around $59.

Any time you have a utility, you basically have a company that has its hand in your pocket, because it has a required rate of return it has to earn. This is a long, ongoing saga, of trying to get a pipeline through the US as well as getting one into eastern Canada. So far they are being blocked at every turn. The stock has fallen down to what he considers to be pretty darn good support, at about $40-$41, about 1.5X BV. It doesn’t have a ton of upside potential because it needs one of those pipeline projects. Has a nice 4.5% dividend yield while you are waiting.

A great company, but if you are looking for a pipeline company with a lot less hair on it, why not Enbridge (ENB-T)?

There is a good probability that this company may keep the dividend where it is at. He has reduced his position. Likes the company and likes the pipelines. The bigger concern is that we are in an environment where pension funds are going to have to Sell. Because of that he would rather be high in cash, waiting for these to come down, and then go back in.

With the pullback we have seen, particularly in this company, he would seriously be looking at buying this. A lot of their revenue is fairly consistent. Currently paying a 4.8% dividend yield, which is quite competitive in today’s market. They still have projects beyond KXL that could expand their base of revenue.

3-5 year Hold for an RESP? The pipes have all set back in sympathy with the energy complex. With the yield and a purchase here, it is trading at a higher multiple than where they used to trade historically. You can put this in as a longer-term investment, but don’t expect the kind of returns you saw in the last 5 years.

They were impacted by higher payout ratios from US companies (all painted with the same brush). It has come off, but he prefers ENB-T because it is more involved in liquids, whereas TRP-T is gassier. If their big projects happen, TRP-T could go up 20%. However he prefers going with best in class (ENB-T).

One of his most recent purchases. The yield is attractive, and is one of the best run Canadian companies by a long shot. 75% pipeline and 25% power generation.

This company can afford a lot of debt, because they have very, very stable cash flows. Regardless of the price of a commodity, it still needs to be transported. Yield of about 5% is not bad, but not super attractive.

A lot of these pipelines are going to be very much a first derivative on your view of the commodity price. Their balance sheet is fine and it is not a bad entry point.

Technials are not looking that good as it is in a downtrend, and underperforming the market. It is trending down and momentum indicators don’t look good. It is normally seasonally strong from end of Jan until May. Technicals do not support the trade right now. Look at it at the end of January for bottoming and forming a base.

Just sold his holdings in the $49 area. Feels it is still too early to get back in. They still have too many projects with question marks over their futures. He wonders where the earnings growth is going to come from.