Unveiling the Dynamics of Pipelines and Utilities: Pros, Cons, Best Stocks – Subsectors Series [Podcast]

February 14, 2024

It’s one thing to know the 11 sectors, but it’s another to understand what each subsector does and how you can benefit from it as an investor. This first episode of our subsector series unveils the dynamics of pipelines and four industries of the utility sector. Learn about their pros and cons and the best dividend stocks.

Subscribe to our newsletter to receive our Get the Best of 6 Sectors issue.

You’ll Learn

The Energy sector includes three main categories: Upstream, Midstream and Downstream. Mike explains the difference between them.
We continue by summarizing the sector’s strengths and weaknesses, including a hedge against inflation and high volatility.
For the episode, we focused on Oil & Gas Midstream, better known as pipelines. Why is this industry attractive?
In which context do pipelines show a strong performance and when are they lagging the market?
For years, Mike told us he did not like the energy sector except for pipelines. However, he sold the ones in his portfolio and the DSR portfolio models. Why is it so?
Let’s now discuss our favorites in the subsector. In the Canadian market, we have Enbridge (ENB), TC Energy (TRP), and Pembina Pipeline(PPL.TO). Why are they worthy of mentioning?
In the US, we can’t ignore Energy Transfer (ET), Enterprise Products Partners (EPD), and Kinder Morgan (KMI).
Vero noticed that most pipelines have a PRO Rating and a Dividend Safety Score of 3 at Dividend Stocks Rock, including Mike’s picks. So then, how can we know they’re among the best choices?
Let’s move to the utilities. In this case, we discuss various subsectors to understand their pros and cons. Simply put, utilities can be divided into regulated and non-regulated ones. But what’s the difference between them?
When are utilities more prone to performance? And why has the market not embraced them much in recent years?
Let’s discuss some stocks! In the Renewable Energy industry, Mike selected Brookfield Renewable (BEP), NextEra Energy (NEE), NextEra Energy Partners (NEP), and Innergex Renewable Energy (INE.TO). Mike describes them and tells why they’re among the best stocks.
There are also many good options in the Regulated Electric industry, namely Hydro One (H.TO), Fortis (FTS), Emera (EMA), Xcel Energy (XEL), and WEC Energy Group (WEC). Of course, we all need power, but what else makes them attractive?
An excellent example of the Regulated Water subsector would be American State Water (AWR). This Dividend King has a lot of acquisition potential.
To end this episode, we also need to mention that there are diversified utilities. An example is Brookfield Infrastructure Partners (BIP). How would you analyze a diversified utility?