New projects will bolster their dividends

Article Excerpt

Both TransCanada and Enbridge have earmarked huge sums for new pipelines. That will add to their already high debt levels. However, steady cash flows from shipping contracts with oil and gas producers will help them service their debt, and let them keep raising their dividends. While we prefer TransCanada for new buying, we like both. TRANSCANADA CORP. $57 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 903.6 million; Market cap: $51.5 billion; Price-to-sales ratio: 3.8; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.transcanada.com) is now working on $21.3 billion in near-term projects that it expects to complete between 2018 and 2021. That work includes spending $4.7 billion to expand its NGTL pipeline system. It pumps natural gas from Alberta and B.C. to eastern Canada and the U.S. Upgrading the NGTL system will help the company profit from rising gas production in B.C.’s Montney region. Other near-term projects include upgrades to its gas pipelines in the U.S. ($6.2 billion U.S.) and…