Two Dividend Payers In Low-Risk Buy Zones

It’s been a solid month for the market, with the S&P 500 (SPY) up 6% in January and another 1% to start February. However, the real winners have been growth stocks, with the Russell 1000 Growth Index Fund (IWF) up 10% year-to-date.

This broad-based rally has made it more difficult to find names trading at deep discounts to fair value, but there are still a few names that continue to look attractive, especially if one is looking to battle-harden and diversify their portfolio with high yields.

Given the violent pullback in natural gas prices and some disappointing company-specific news this week, TC Energy (TRP) and National Fuel Gas Company (NFG) have found themselves sitting near 52-week lows, placing them in a relatively low-risk buy zone to start new positions. Let’s take a closer look below:

TC Energy (TRP)

TC Energy is one of the largest North American energy companies. It is best known as the owner of the Keystone XL Pipeline (~2,900 miles) that transports Canadian/US crude oil supplies across North America and the ANR Pipeline, one of the largest interstate natural gas pipeline systems (~9,200 miles) in the US.

The company was founded in 1951 and continues to have one of the best dividend track records among its peers, consistently paying and growing its dividend over the past 22 years, from $0.80 in FY2022 to $3.60 in FY2022.

Unfortunately, while it is a steady dividend and earnings grower that has continued to diversify with a focus on adding renewables over the past few years, it has had a rough past year from an inflationary standpoint.

This is evidenced by the company having to raise the cost estimate for its Coastal GasLink Project in Western Canada to ~$11.0 billion, impacting its FY2023 capital spending outlook, which has come after already reporting a doubling of the initial cost estimate to ~$7.0+ billion six months ago.

The continued cost increases can be attributed to construction delays due to COVID-19 disruptions and protests, combined with higher costs for materials. Continue reading "Two Dividend Payers In Low-Risk Buy Zones"