TC Energy (TRP.TO)

Headlines today are all about Brascan Keystone. As a long-term investor, you want to ask yourself if you want to own a major North American mover of an energy commodity. This company fills that bill quite nicely. With their most recent acquisition of Columbia, they have a really good play on the whole North American energy infrastructure. Reasonably hedged between oil and natural gas. A great place to play in the dividend growth we have seen for 50 years, and will probably see down the road as well. A little pricey relative to Enbridge (ENB-T), but this is a great long-term ownership, particularly since we are not going to build a lot of new pipelines. Dividend yield of 3.9%.

Pipelines have had their problems politically, but the Keystone looks like it is on its way. This is going to give them another big source of revenue over time. He considers pipelines as utilities. Revenues are pretty predictable. (See Top Picks.)

It is a really good company. It is a low return-on-capital company, but it is expected to be. It is at a decent valuation, has a good dividend yield with a decent payout ratio. He would like to see the leverage down a little.

This company has done something very unique in not dealing in Canada any more, but moving into the US. This has made a really large acquisition, so you should see some really good growth in the next little while. This acquisition allows them to make more acquisitions down the road. Great dividend yield.

There is just not enough going on for him to stick around. It is going to be interest sensitive, and he has been reducing his exposure to these names. Has a decent dividend of about 4%, but the stock is not cheap.

A growth dividend payer. For pipelines, there is such a lead time in construction, contracts, etc. This has basically laid out 8%-10% earnings growth over each of the next 5 years with commensurate dividend growth. If you get that and you keep the current valuation, you are going to get 5 years of compound 12% a year or something. It’ll probably end up less, because rates are going to go up. A relatively safe way to park some money. Dividend yield of 4%. (Analysts’ price target is $72.)

The prospects for this company with Keystone has improved significantly. Trump’s positive approach to this is not going to go away. The States they are involved with seem to have a positive attitude towards it.

This company and Enbridge (ENB-T), which he owns, are not too dissimilar. Both made very large US acquisitions, and this is where growth comes from for the next while. You could own either as they will both do very well over the next several years. Once they integrate their acquisitions in, you will see much better cash flow growth, but more importantly, you will see their ability to make even bigger acquisitions.

Sell TransCanada (TRP-T) and move into Enbridge (ENB-T)? He would keep this as well as buying into Enbridge. You can’t really go wrong with both.

An interesting time to be in the pipeline business in Canada, because after being viewed as a growth stock, they are now viewed as “don’t touch” because of all the uncertainty. It’s a good company.

(A Top Pick May 10/16. Up 28%.) Doesn’t own this anymore, because of valuation. He likes Enbridge (ENB-T) better because it is cheaper, and has a better trajectory, but with more risk. You are probably going to do well with both, and the rate of return might be close to being the same. Both are fantastic core holdings for anybody’s portfolio.

TRP-T vs. PPL-T. PPL-T has been expensive historically because management is worthy of it and so he would go for this one. He owns EMB-T because of the advantage that whoever you have to pay bills to you should own them. They have growing dividends at 8-10%. He likes the premium management of PPL-T and it is worthy of an increased multiple.

(A Top Pick Dec 23/16. Up 4%.) He thought there might be some uptick if the Keystone pipeline was approved and the integration of the Columbian pipeline. A great name to continue to hold. They are projecting dividend growth of over 10% over the next 3 years. They have $23-$24 billion of projects coming on in Mexico, the US and Canada.

Preferred series K, 4.9%? This company has a number of preferred shares outstanding, and he believes the K series has the floor feature which is relatively new. He would call this a great issue. You’ve got the coupon, you’ve got the floor feature, so you are protected.

Keystone will provide an earnings pop. A tremendous amount of growth will take place in materials over the next 5 years. It provides very good visibility. It will drive high single digit dividend growth. It is a good investment for growth and income. He does not think they will cut the dividend.