Inter Pipeline

IPL-T

Core position. Stable, really likes it. Reserves will be there for a long time. Has best long-term contracts for ancillary pipelines in the oil sands. You're getting their new plastics plant for nothing. Oil sands revenue underpins the dividend. In 2022, should get a 25% hike in dividend and earnings. Part of Alberta is being given away right now.

They sold it because they are involved in a $3.5B mega project in Alberta that will take 3-4 years to finalize and start generating the $500M expected.

Stable dividend? A good solid pipeline and the dividend is safe. She does not own this however. The stock price will be swayed by the oil price, but the company is well run. It is a safe long term hold. The petrochemical plant is keeping her from stepping in to buy until they can demonstrate long term sign up of customers. Yield 8.4%

He would be looking to add it for a long term hold. They will be building out a lot of their assets, so the cash flow will be taxed for the next couple of years. They will not likely increase the dividend during this time. Compared to its peers, it is cheap.

Would begin taking a position, or in any of the other pipelines. But be strategic. Don't put all your money in right now. Whatever's going to happen in the next year, the yield will increase because the stock price will come down. When the market gets hit, the funds sell whatever is liquid and the dividend yield gets pushed up because everyone is selling, and that's a great time to buy.

Their build out was focused on the oil sands and that could hurt them. He thinks the dividend is safe, but does not see investors coming back to trade the stock at the multiples of the past.

Now that it has under performed so much, it might be a buy. The dividend is safe. For sure it is a hold. Enbridge is still his preferred in the sector.

Be careful. Looks like the dividend is going up, but it's because the price is going down. You want close to the 10% dividend growth. If you want yield, think about Pembina, as it has more consistent contracts. IPL is more volatile, and not something you'd want to hold.

It has under performed. They made this transformational construction of this $3.3 billion petrochemical complex. There was a reverse of the pipeline of propane as they need it from the US to make plastic. He thinks it is incredible cheap and will show results in six months. Yield is 8.2% with a 75% payout ratio. Potential for a take out. (Analysts’ price target is $24.33)

He sold it a few months ago. Their new petrochem facility transforms Alberta propane into plastic pellets for consumer goods and industrial use. A good idea as Alberta lacks pipelines to move natural gas. $550 million EBITDA from comes this $3.5 billion plant when it comes online in 2021. That's good. However, IPL has been secretive about the plant's progress, and this plant exposes them to the risk of commodity price risk. To offset that, they need to close take-or-pay contracts with other producers of the end product, and IPL hasn't done that. Also, they have problems with storage terminals in Europe--not used to capacity.

All the pipelines have traded well this year. They're bond proxies. He's looking at defensives like this and he ranks IPL fourth among pipeline stocks. He likes pipelines because there's a finite number of them that will be valuable more in the future than now.

They have a lot of growth projects related to the Oil Sands, so he doesn't see growth. Not his favourite midstream name. He prefers ENB-T.

Pays a 7.65% dividend, but its earnings estimates are weak. They pay out more than they earn. That's a problem. This will trade sideways.

IPL vs. ENB He likes both and owns four in his portfolio. ENB pays a higher yield at 5.95% and has had a nice rebound. He likes pipelines for cash flow. ENG pays a slightly higher rate of return. There's little risk in buying pipelines, because we're not building them. He prefers ENB.