TC Energy (TRP.TO)

Buy at current levels. Good exposure to growth in natural gas demand, with natural gas egress in western Canada. Company split will probably eventually be well received -- the asset is fully contracted for 2 decades, predictable cashflows. Discount to peers. Yield is 7%, solid.

TRP plans to spin off its liquids division, TC Energy Liquid Corp., South Bow. Under the proposed spinoff, TC Energy shareholders will retain their current ownership in TC Energy's common shares and receive a pro-rata allocation of common shares in the new Liquids Pipelines Company, South Bow. The spin off will be tax free to Canadians. Full details are still not available, but we believe it is the right move for the company. Dividends (total) will stay the same and should continue to grow at both companies. We would, for now, suggest keeping both, unless and until new information becomes available. There is still plenty of time here before the split closes. 
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Coastal GasLink on schedule and on budget, set to deliver gas by end of fiscal 2023. This should be a de-risking event for them. Pretty cheap at 11x 2024. Asset sales should help de-risk. Really good dividend, good price, OK catalysts. Not a lot of growth. Will work at these levels, with interest rates coming down. His pecking order is ALA, ENB, and then TRP.

Pipeline business has been under extreme pressure in Canada, and should be performing better. Assets are very valuable as hard to replicated. Energy sector still has opportunity. Demand for oil will remain for the next decade. 

His large-cap, Canadian energy exposure. Good valuation, yield is higher than ENB.

Investor Day highlighted plans to separate business into natural gas and pipelines. Discount valuation to peers. Identity crisis. If you own, sit tight. Good assets, value will be unlocked, paid to wait. If you don't own it, buy ENB instead.

The outlook is good with increased profit guidance and the company's confidence in reducing debt levels by the end of next year. It has a 7.2% yield and can grow its dividends by 3 to 5% a year. if there are rate cuts next year this would be good for high dividend payers such as pipelines.
Buy 10  Hold 10  Sell 2

TRP currently has a high debt load, with a net debt of and net debt/EBITDA reaching 8.2x, which is high compared to peers and to TRP’s historical range as well. The total capex is also quite high, estimated to be around $12B, which accounts all the operating cash flow. This is very common for the sector, though, and TRP is not unique here. 

The encouraging news is that TRP is accelerating the deleveraging process by divesting $5+ billion in assets as recently TRP completed the sale of 40% of a non-controlling equity interest.
Overall, we don’t like too much debt, but cash flow is stable and the business is regulated. We consider it 'OK' for income but do prefer ENB and PPL.
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No insight on any lawsuit, but sounds political. US elections are next year, so we'll see. Lagged the group because of Coastal GasLink cost overruns, which should be behind them next year. Pipelines as a group are attractive for income. Yield's probably over 7%. She owns ENB, yielding over 7%, and PPL with a yield of over 6%.

They're Coastal Gaslink is nearly down and will break off the company into two which will be more focussed, and one will attract ESG investors. Also are shedding non-core assets. The stock has been under a dark cloud, but this sets this up nicely for future returns.

Re-evaluating strategy. Asset sale proceeds used to pay down debt. Coastal GasLink will help move product. Dividend is nice to have in your portfolio. 89% of debt is fixed rate, and average maturity is 18 years, so well insulated from impact of higher rates. Yield is 7.57%.

Higher interest rates tough on business. Higher debt loads a concern. Dividend very safe around 8%. If rates fall, will be good for business. Relatively safe business. As long as rates don't go up, is a good time to buy. 

Management has shored up the balance sheet. Assets cannot be replaced--it's very hard to build a pipeline from scratch, so they enjoy a moat. Trades at only 10x PE and pays an 8% dividend yield.

Pipelines are long bonds. He targets its current price. Pays nearly an 8% dividend. If the yield curve is controlled, little will happen to this stock. Hold. See what happens.

Less leverage than peers in sector. Valuable assets since not building anymore. Would be top pick in sector.