ANALYSIS-Canada pipelines offer investors shelter from economic storm

Fri Jan 18, 2013 3:00pm EST
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* TransCanada, Enbridge more than defensive stocks -analysts

* Both have projects getting less ink than Keystone, Gateway

* Higher fourth-quarter earnings expected

By Jeffrey Jones

CALGARY, Alberta, Jan 18 (Reuters) - Shares in Canada's pipeline companies are hitting new peaks as their stable business models and prospects for rising dividends prompt investors to overlook environmental and regulatory risks surrounding their new multibillion-dollar project proposals.

A shaky economic outlook in the United States and Europe has investors seeking defensive stocks, and TransCanada Corp and Enbridge Inc offer more than just shelter from the storm, analysts said.

Projects such as TransCanada's $5.3 billion Keystone XL proposal and Enbridge's C$6 billion ($6 billion) Northern Gateway plan account for the bulk of the headlines.

But both companies generate oodles of cash with existing assets backed by long-term contracts, and have a host of less contentious new developments on tap.

"People want yield, and yield plus growth is a solid combination," FirstEnergy Capital Corp analyst Steven Paget said, who has a "buy" rating on Enbridge and "market perform" on TransCanada.   Continued...