TC Energy (TRP.TO)

A very interesting time to be looking at this. He had a small exposure, but it has now caught his eye. It is basically hovering around its 52 week low and has a 5% dividend. Trading at about 15X multiple, which is fairly reasonable in this industry. ROE on these companies has never been really high but a lot of their contracts are long term and take or pay. They are not given credit for their other opportunities to expand their base. Thinks they will be spending a lot of their money over the next few years in other expansions.

All the pipelines have been struggling as oil prices stayed lower for longer. Valuations were quite high, but down here it is getting a little more attractive. You have to think that we must be getting through some of the bottoming process in energy prices. If so, these assets are worth a ton of money and they generate a lot of cash flow. This company has a lot of growth projects. He likes the name.

Pipelines overall pay really good dividends and so are more highly valued now than historically. As rates increase you may see these underperform. He is not sure there is a lot of growth potential. The dividend is quality without risk. XL was never going to happen.

How much does this political wrangling impact this company’s value? He is modelling this company as not having the big energy products go through. Without Keystone and without Energy East he still sees 4.2% cash flow per share growth and 8.2% dividend growth. Trading cheaper than its peer group average at around 24X, so it is a name that is relatively viable here. As long as oil is in the penalty box, you are not going to have an easy time with pipelines. However, this one is pretty defensive and is a bond yield alternative.

Have just asked for a postponement of the verdict on Keystone. Earnings which were a little better than analysts were expecting. This is a company that can solidly generate earnings per share and earnings per share growth on a continual basis. Lots of pipelines are being built and there are lots of ways to move gas and oil, and this company is in there.

He would like to see how the Energy East story starts to unfold. If it starts to work, then you could buy this.

Down 20% this year. This is one of the utility/pipelines that have massively underperformed, because of fears about interest rate increases. These are interest rate sensitive to some degree, but Canada has cut interest rates twice and the US hasn’t raised interest rates. Keystone XL will get sorted out at some stage eventually. Have a great portfolio of clean energy and pipelines, and will get some growth by building ones that are allowed to progress. In the meantime you’re getting a pretty reasonable yield.

Decent yield and increasing 5-7% a year. A little challenged like all pipelines by current energy prices. Over the next couple of years they have projects that will come on, but after that it is clouded and could slow down dividend growth. Multiples are reasonable.

A well managed company, but trading where it is strictly for the dividend yield. They have not increased earnings over the last decade or so. As rates start to rise one day, these utilities are going to suffer.

The dividend is safe. 8% dividend growth over the next few years. In 5 years you will probably be fine.

The challenge he has is the Keystone issue and they have a tendency to move with the price of the commodity. The dividend yield looks inviting and the dividend quality is decent. He thinks this group still has room to go down further.

Sold it in the upper forties and as not been tempted to go back. It was his choice because of all the great prospects. Don`t be married to the stock.

Is this worth holding for a one-year term? He believes it is. This has been weaker than what he would have expected at this stage. Doesn’t think Keystone will make a huge difference to the price. They have target of growing their dividend at 8%-10% a year through 2017, and feels that is achievable. They are cutting costs and have lain off a number of people. There is decent upside from these levels.

(Top Pick Oct 20/14, Down 16.72%) He likes it for the dividend and their increases. The pipelines act like they are oil producers, which they are not. Keystone is priced out of the stock.

Likes this stock. It has had a brutal year in terms of share price with a decline of about 20%. In the meantime its business is increasing. Management has guided to about a 9% dividend annual increases for the next few years. Have a number of capital projects that are on the go. Tends to get a lot of negative press, but they have a lot of great growth projects. A good holding.