TC Energy formerly TransCanada (Symbol-TRP)

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Post by ModeratorQ »

[Housekeeping]

The previous six posts have been merged in from earlier threads.

[/Housekeeping]
sydney2
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Post by sydney2 »

Thanks for the information, it is interesting to read all the previous threads on TRP. I certainly have it on my radar screen to watch and maybe jump in. I bought this in my Mother's account some years back and she still holds it, purchased @18.00. I was going to buy it when they cut the dividend and it went down to $10.00 but my broker talked me out of it. Serenity, I admire you for holding on, it certainly has paid off for you. I feel TRP is pure quality, it may take awhile, but if the pipeline action gets under way this should take off.
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scomac
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Post by scomac »

Nibbled today @ $33.68. It's not cheap on an historical basis, but it is selling well below its peer group, particularily the pipe trusts.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Shakespeare
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Post by Shakespeare »

It's not cheap on an historical basis
Yeah, I think I'd like 4% yield (~$31).
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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Post by Arby »

scomac wrote:... it is selling well below its peer group, particularily the pipe trusts.
I still like the pipeline trusts versus TRP, although the gap is narrowing on the basis of after-tax yield. FCE.un currently yields 7.7%. PIF.un yields 6.6%. The distributions for these trusts is about 15% tax deferred ROC and 85% taxable income. The ROC portion has decreased over the years, which makes the trusts less attractive on an after-tax basis. TRP currently yields only 3.7%, but the distribution is taxed at the favourable dividend rate.
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scomac
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Post by scomac »

Shakespeare wrote:
It's not cheap on an historical basis
Yeah, I think I'd like 4% yield (~$31).
That's why I nibbled. :wink:
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Shakespeare
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Post by Shakespeare »

A 100 share nibble at $31.85.

The interest-sensitives seem to be pricing in higher rates.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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scomac
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Post by scomac »

Shakespeare wrote:A 100 share nibble at $31.85.
A 100 share nibble at $31.74. :P

(I think I owed you that for the razzing you gave me over EP.UN. :wink: )
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Bylo Selhi
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Post by Bylo Selhi »

Ya shudda waited. TRP closed at $31.68 :P
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scomac
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Post by scomac »

Hell, I never buy at the bottom. I ain't that smart! :roll:
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Shakespeare
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Post by Shakespeare »

I think there's more down yet on the interest-sensitives.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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yielder
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Post by yielder »

Shakespeare wrote:I think there's more down yet on the interest-sensitives.
Lots more, I think. I don't have any more room though, having filled up in early 2003.
Last edited by yielder on 12 May 2006 04:57, edited 1 time in total.
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Shakespeare
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Post by Shakespeare »

I don't have any more room
I expect to sell AIT later this year and possibly BCE; the rough calculations I did on the value of the AIT units if they spin them off suggest a significant drop in the BCE price. So I'm looking for replacements.
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Post by pitz »

Shakespeare wrote:I think there's more down yet on the interest-sensitives.
Interest rates are still going down.
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yielder
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Post by yielder »

pitz wrote:
Shakespeare wrote:I think there's more down yet on the interest-sensitives.
Interest rates are still going down.
????

Image

And the avg yield of Canadas over 10 years has risen from ~4.05% at the end of Dec 05 to ~4.53% currently.
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Post by Taggart »

Shakes said:

>>>The interest-sensitives seem to be pricing in higher rates.<<<

That could be a big chunk of the reason, but I'm beginning to think maybe there is money flowing out of the higher yielding dividend stocks and into the commodities sector, (at least that's what I'm hoping). :D

As per the pipeline utilities this is what Irwin Michael of ABC Fundamental Value had to say regarding natural gas prices.

"Most people don't like natural gas because it's trading under $7 (U.S. per million British thermal units),"
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Post by Taggart »

More recent news on Natural Gas Prices:

Businessweek

Gas prices tumble to near one-year low

MAY. 12 4:24 P.M. ET Natural gas futures declined to their lowest level in almost a year on Friday amid soaring inventories of the mostly domestic fuel used to heat homes and produce electricity.

Analysts said the price of natural gas could fall even further in the months ahead, given relatively weak demand and expectations of rising supplies, though they cautioned that production in the Gulf of Mexico remains hindered by damage from last year's powerful hurricanes Katrina and Rita.

"Unless we have a repeat of last summer's hurricane season, we're going to have so much (natural) gas in storage by September that we won't have anywhere to put it," said Daniel Lippe of Petral Worldwide Consulting in Houston.
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AltaRed
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Post by AltaRed »

Gas is actually rather reasonably priced (and perhaps still too high) for this time of year. With oil at $70 and a 'rule of thumb' multiplier of 10, gas on an annual average basis should not be more than about $7 on the NYMEX. I think it has room to drop more (e.g. to $5.50-6.00) in the very near term. That could have collateral, though unwarranted, impact on stocks like TRP opening up even more buying opportunity.
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Post by pitz »

AltaRed, Jeff Rubin sees it slightly differently (the man who says TSX = 15,000 next year):

http://research.cibcwm.com/economic_pub ... imay06.pdf
Global climate change is already reshaping energy
demand curves all around the globe. The warmest
winter on record in North America has seen Henry
Hub natural gas prices plummet by 40%. But global
warming also means hotter summers, and
consequently rising demand for electricity. And with
natural gas now the fastest growing and most
dominant source of new electric power generation,
look for natural gas prices to rise alongside North
America’s summer temperatures.
Interesting reading, at least pages 6-9.

Lots of stuff on the TSX looks remarkably cheap right now. Esp. financials and utilities.
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Post by Taggart »

Sorry for putting this in the TRP thread but I wanted to continue with the good points AltaRed and Pitz made.

From yesterday's Toronto Star:

Enbridge favours bigger role for gas

Nuclear not the only answer
Incentives urged for fuel switching

May 12, 2006. 01:00 AM
TYLER HAMILTON
BUSINESS REPORTER
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Shakespeare
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Post by Shakespeare »

Another nibble, $31.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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4% yield; the new norm?

Post by zaman »

Looking at a five or ten year yield chart on TRP, the yield has been steadily declining from 7% in 96, 5% in 2001 to 4% currently. (With a blip in 2000 when they cut the div) Is this change due to:

A) a lower interest rate environment, thus decreasing the yield investors will accept,

B) selling off slow growth businesses and focusing on increasing growth, (thus lowering the yield needed to make it attractive)

C) good management

D) or some other factor.

The reason I ask is that it has been repeated in this post that historically speaking a 4% yield is low, but looking at the long term trend and how the current management is developing the business (ie with growth prospects) I'm wondering if the trend (of a lower yield), in TRP's case, is here to stay.
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Wallace
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Post by Wallace »

I bought TRP today at $32.75. I'm quite happy with the dividend. It's higher than I'd get in a money market fund. And now that interest rates have stabilised (I hope 8) ) there may be some upside.

I owned this at the end of the 1990s too. Unlike Scomac and some of the others I bailed when the dividend was cut and the price dropped. I just didn't have the patience I suppose. :(

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yielder
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Re: 4% yield; the new norm?

Post by yielder »

zaman wrote:Looking at a five or ten year yield chart on TRP,
Image

Image

Image

If you exclude 1999 and 2000, the average high yield is 5.1% and the average low yield is 3.7% over the past 10 years. Going back to the early 90s shows a similar range. The high and low multiples have shown a similarly consistent range. What is noticeable is the post dot.con period where multiples have expanded and yields have dropped. I suspect that is due to yield chasing and not to anything that the company is doing. Whether it is permanent or not is more or less a coin toss. Notwithstanding, I'd expect a fair number of wake-up calls among yield chasers at some point much as we saw with Dogs of the Dow. While the northern gas pipeline could be a big winner for TRP is far too early to start discounting its impact. Who knows what problems will exist and, more importantly, what costs will be incurred.

This is an interest rate sensitive stock and money will flow out of it into 10 year bonds when 10 year yields (currently 4.46%) are relatively attractive on a tax-adjusted basis to TRP's yield (currently 3.90%).

Disclosure: I have a position. This is not a recommendation to buy or sell. People should do their own research and make their own decisions, ie, I'm not responsible for what you do.
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Post by AltaRed »

Wallace wrote:I owned this at the end of the 1990s too. Unlike Scomac and some of the others I bailed when the dividend was cut and the price dropped. I just didn't have the patience I suppose. :(

Live and learn.
I was even less bright. I knew Doug Baldwin well enough to know he was going to be a successful turnaround artist and I chatted to him about it at the time. I didn't have the smarts to invest in it big time when I knew a $10 share price was ridiculously low. However, that learning did translate into some bargain shopping in 2002.
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