RBC Capital Markets analyst Maurice Choy provided analysis and top picks in the energy infrastructure sector,
“Our view: We are bullish on the Canadian Energy Infrastructure sector, which offers investors multiple ways to gain low-risk exposure to North America’s multi-year energy growth that lies ahead. We particularly favour the Canadian Midstream stocks as we believe that the WCSB’s [Western Canadian Sedimentary Basin] natural gas, NGL and oil volume growth outlook through 2030 remains unaffected by the recent low commodity prices. Moreover, we like Midstream’s progressively healthy financial setups, relatively sound capital allocation philosophies, and increasingly disciplined approach to risk management. If investors are concerned with a slowing economy, the Utilities stocks are solid options, with their low-risk, regulated earnings remaining the bedrock of the sector’s decades-long defensive attributes (not to mention the Utilities’ energy transition-driven growth opportunities and rising electricity demand backdrop). The Alberta Power companies are also well-positioned to serve the province’s growing power needs, particularly as data centre load growth emerges. Big picture, Midstream and Utilities’ dividends are sustainable and set to grow, with the 5.0% average dividend yield likely being attractive to income-oriented investors amid today’s interest rate environment. We prefer Pembina, Keyera, and TC Energy on Midstream; and AltaGas, Emera, Brookfield Infrastructure and TransAlta on Utilities and Alberta Power”