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87% of Wall Street Analysts Rate TransCanada a ‘Buy’

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Analyst recommendations

Of the analysts surveyed by Reuters, ~87% rated TransCanada (TRP) a “buy” and 13% rated it a “hold.” None of the surveyed analysts rated TRP a “sell.” The consensus target price for TRP is ~$58.29. Its stock is currently trading at $47.47. If TransCanada attains its target price within a year, it would mean 22% upside for investors.

The graph above compares analysts’ recommendations for Enbridge (ENB) and TransCanada.

Of the analysts surveyed by Reuters, ~63% rated Enbridge a “buy” and 37% rated it a “hold.” The consensus target price for ENB is $47.84. Its stock is currently trading at $39.16. If the company attains this target price within this year, it would mean a 22% price return for investors.

In comparison, 58% of analysts rated Kinder Morgan (KMI) stock a “buy” while 42% rated the stock a “hold.” For the latest updates on KMI, read Kinder Morgan Rose 5% in the First Week of 2018.

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Outlook for TRP and ENB

TransCanada’s diversified operations, strong dividend growth history, and expected future dividend growth make it attractive. It expects CAGR dividend growth of 8%–10% over the next three years. Though the stock is trading at a slightly lower yield of ~4%, its potential dividend growth is attractive. TransCanada’s stable cash-flows and growth projects provide it with visibility for dividend growth. These positives should reflect in TRP’s price.

With the completion of a merger with Spectra Energy in February 2017, Enbridge’s business mix has become more diversified. With a solid history of dividend growth, Enbridge’s expected dividend increase at a CAGR of 10% from 2018 to 2020 is also attractive. A yield of ~5.0% at a healthy coverage ratio makes ENB attractive to income investors as well.

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