TC Energy(US:TRP) Seeking Alphaยท2024-07-23 11:30Market Overview - The stock market is experiencing a significant rotation, with many investors surprised by the shift and its underlying causes [5][20]. - The S&P 500 has become top-heavy with tech stocks, accounting for 37% of its total value at the start of the month, leading to new risks and opportunities as the market rotates [18][19]. Company Analysis: Rexford Industrial Realty (REXR) - Rexford Industrial Realty operates in Southern California's infill markets, which are characterized by constrained supply and strong demand, benefiting from geographic and zoning challenges [12][13]. - The company reported a 21% increase in consolidated net operating income (NOI) and an 11% increase in funds from operations (FFO) per share compared to the prior year [41]. - Rexford expects its cash NOI to grow by $229 million (35%) over the next three years, driven by value-adding initiatives and rent adjustments [41]. Company Analysis: TC Energy Corporation (TRP) - TC Energy is one of the largest midstream companies globally, with a focus on regulated income and long-term contracts, providing stability in a growth-oriented industry [46][48]. - The company reported an 11% increase in EBITDA in the first quarter compared to the same quarter last year, driven by high demand and operational efficiency [49]. - TC Energy's dividend is expected to grow by 3-5% per year, having been increased for 24 consecutive years, indicating a strong commitment to shareholder returns [53]. Investment Outlook - The current market dynamics present significant opportunities for undervalued dividend growth stocks, particularly in sectors outside of technology [61]. - Both Rexford Industrial Realty and TC Energy are well-positioned to capitalize on the ongoing market rotation, with strong fundamentals and attractive yields [61].