TC Energy is an energy infrastructure company that boasts a huge portfolio of oil and gas pipelines that connect supply from their production basins to key North American markets. These unique assets are difficult to replicate and represent what Warren Buffett refers to as an “economic moat.”
The company also owns and operates seven nuclear and gas power generation facilities in Canada and the United States. Shares have recently been under pressure due to general macroeconomic concerns and some specific company events, including cost inflation on the construction of its Coastal GasLink pipeline, which has caused some negative headline news. Now that the company has finished installing the pipeline, no further cost overruns are expected to be reported.
In general, higher rates have made bond returns appear more attractive relative to higher-yielding equities. As a result, shares in interest-rate-sensitive, high-income companies such as TC Energy have sold off.
Its shares are at about $50, down 32 per cent from a high of almost $75 last year, representing an attractive value at 11.8x earnings and boasting a very impressive dividend yield of 7.6 per cent. If you like income, this is a great opportunity to pick up some TC Energy shares at a very attractive price.