Altagas Ltd (ALA.TO)

He has recommended this several times. The acquisition is now closed on WGL. They sold about 1/3 of their Northeast BC assets to pay for it. This has worked out well, because these assets are trading at a premium in the private capital market. He has been buying since $24 and likes the 7% yield.

They used to own a lot of this stock, but when interest rates began to rise it raised the risk-free rate and made running the business more difficult so they sold out. The company already has a moderate level of debt and the WGL acquisition will add to their leveraged position. They will manage the new asset well, but he thinks the risk of rising interest rates will add headwinds.

They have an export terminal for propane in BC. Alberta is awash in propane. They are building this export facility. He used to own this. WGL Holdings should close any day and improves their metrics considerably. The burden of proof is on them. This is not that synergistic an acquisition.

He would not touch this stock. The high yield is deceptive. It pays out more than it earns and so the balance sheet is deteriorating by 5% per year. His model price is 13% lower than yesterday’s closing price.

Is the dividend safe? Safe-ish. Better things are happening. If the US acquisition goes through it is going to be an OK story.

IPL vs ALA - He likes them both. There's upside in IPL. ALA pays a good dividend of around 8% and its prices has come down nicely so it's a good time to step in. If things turn around in Alberta, ALA will benefit with a nice move and institutional money will move in.

Many ask him about this stock. He sold his shares recently. Altagas sold its crown jewel asset in BC and replaced it with a lower-case one, which they're now pushing for closure. Their free cash flow isn't impressive. This could grind higher to $28. They will likely sell more assets and borrow more to complete their WGL acquisition.

Name has been hurt, but think it’s getting its legs. Bottomed out around $22.75, now a nice trend. Resistance around $26.40 and also $30. Sold recent hydro assets for a pretty penny, plus WGL will be a catalyst when it closes. Good risk reward. Really good dividend, expect a bit of volatility ahead. Interest rates really screaming up will hurt it, but probably won't happen. Will probably need to do a secondary financing, which will depress the stock. Going forward, as a yield-focus, you’ll be pretty happy. Has been doing a DRIP. (Analysts’ price target is $28.48.)

He used to own it for a long time. Pays a 8.8.% dividend when yield stocks are finding pressure. If you own it, hold it. But don't chase the high yield. A high-yield stuck can be cut (and then sometimes the stock price rises)--and ALA's may or may not be sustainable. He doesn't know.

The yield is relatively safe. High dividend at 8.76%. The big overhang is that they’re waiting for approval on their recent acquisition. Need to sell assets to fund this transaction, plus interest rate sensitivity, has contributed to the pullback. Prefers other names in terms of cash flow growth. (Analysts’ price target is about $28.)

He doesn't follow this. Its down channel is not doing well. Natural gas is performing well, but Altagas has not. He doesn't recommend this.

It has a utility type business. It has the highest debt level amongst its peer group. You don’t want to own this one.

It's trading at a 6-year-low, though it's showing good fundamental value. These are capital-rich projects they're involved in, so the ROE is very low, in this case 3%. You buy this for the dividend, which he thinks is safe. Continue to hold it. He's not a fan of interest-sensitive stocks, so no pipelines or utilities.

The Dividend quality scores seems average. Bloated working capital. Weaker in its group.

He used to own it, selling it in fall 2016 before their huge WGL purchase. He was--and remains--concerned with their high valuation. They also carry high debt and are on credit watch after the WGL acquisition. There are safer options out there.