Exploring 5 mid-cap Canadian pipelines that have maintained their dividends since oil prices have plummeted. Interestingly, some even increased their dividends twice in the last 12 months. Mid-cap businesses are safer than small-caps, and mid-caps could provide higher returns than large caps. Which of Altagas Ltd (TSX:ALA), Enbridge Income Fund Holdings Inc (TSX:ENF), Inter Pipeline Ltd (TSX:IPL), Keyera Corp (TSX:KEY), or Veresen Inc (TSX:VSN) pays out safer dividends compared with the group?
Mid-cap pipeline companies should provide higher returns than the large-caps when commodity prices improve because of the smaller sizes of the mid-caps. At the same time, mid-cap businesses are safer than small-caps.
This industry-wide dip makes the mid-cap pipelines attractive dividend investments for Canadian and American investors alike. However, it only makes sense to consider the mid-cap pipelines if their yields are sustainable.
Beware of high yields
One may be tempted to buy Veresen because of its 14.6% yield, the highest yield of the group. However, its high yield is solely because of its price decline; it has only maintained its monthly dividend from a year ago.
On the other hand, the other four mid-cap pipeline companies increased their dividends in the last 12 months. In the same period, Inter Pipeline increased its dividend by 6.1%, and all three of Altagas, Keyera, and Enbridge Income Fund increased their dividends twice for a total increase of 11.9%, 15.7%, and 21%, respectively. These four dividend growers have increased their dividends for at least four consecutive years. Read More
Exploring 3 large-cap Canadian pipelines that have continued to maintain and increase their dividends since oil prices plummeted. Which of Enbridge Inc (TSX:ENB)(NYSE:ENB), TransCanada Corporation (TSX:TRP)(NYSE:TRP), or Pembina Pipeline Corp. (TSX:PPL)(NYSE:PBA) pays out the safest dividend of the group? Which company has the best dividend prospects? Should investors buy these Canadian pipeline companies now or wait?
Kinder Morgan Inc (NYSE:KMI) got a lot of attention when it slashed its dividend by 75%. At the same time, its share price has fallen over 60% from more than $40 to under $16. Yet, strong Canadian energy infrastructure leaders such as Enbridge Inc and TransCanada Corporation have not only maintained but continued to grow their dividends. At the same time, they have also been sold off due to lower oil prices.
Enbridge increased its dividend by 14% this year and it would be its 21st consecutive year increase.
TransCanada should be announcing its dividend hike for this year by the end of March, which would be its 16th consecutive year increase.
Pembina hiked its dividend by 5.2% in May; it has increased it for 4 consecutive years.
Are Their Dividends Sustainable?
Enbridge, TransCanada, and Pembina Pipeline are only more attractive than a year ago if they can maintain healthy dividends. Can they? Read More
Is it smarter to buy a cheap, lower quality business or a more expensive, but higher quality business? Particularly, I’m using Rona and Lowe’s as an example. I missed the opportunity to buy Rona. Was I right or wrong? I reflect on my inaction in this article.
Sometimes, investing is like this. You can miss out on opportunities. This time, I missed out on RONA Inc.’s (TSX:RON)(OTC:RONAF) 100% gain in a day after Lowe’s Companies, Inc. (NYSE:LOW) made another attempt to acquire it.
I checked out Rona as a potential investment just a month or so ago, but I passed on it because of its BB+ credit rating and multiple years of declining earnings from before. Now that I think about it, Rona experienced rising earnings in 2014 and 2015 so it seems like the business is turning around nicely. Of course, Lowe’s wouldn’t buy it if it wasn’t worth its bucks — rather C$24 per share (for a total of C$3.2 billion) as that’s the price Lowe’s is paying.
Lowe’s has been on my watch list for some time now. I’ve been waiting for an opportunity to buy its shares but it always seems to be expensive. Unfortunately, it now takes me 40% more to convert Canadian dollars to US dollars. So even though at one point, Lowe’s shares fell more than 9% during acquisition day, I still couldn’t bring myself to pull the trigger.
U.S. investors don’t have the foreign exchange problem, though. So, Lowe’s is more attractive after the pullback. It’s a high quality, high growth company after all. It has an S&P credit rating of A- and its earnings per share are expected to grow at an average rate of 16% in the foreseeable future.
In doing this exercise, my goal was to determine whether it was the right thing or not for me to have ignored Rona because it had a BB+ rating and I was focusing on building a higher quality portfolio. Read More