Altagas Ltd (ALA.TO)

In the process of completing a huge merger with a Washington DC company. To him, it is a very strange marriage. He wants to see what comes out of that before getting into it. 7.6% dividend yield.

This got beat up with the overall industry. He just started picking some up in the last month or 2. Technically, he feels the bottom is in and the stock is starting to make some gains. This is not for the faint of heart as it is going to have some volatility. As long as you have a medium to high risk tolerance, it’s a name that you could look at accumulating.

He sold around $40. They acquired some things in the last few years. They are still in transition, sorting out what they will keep. The yield is safe. He is waiting for their yield plus growth to reach 10%.

This provides energy infrastructure. They own power generation assets. In the process of completing a US large acquisition, this is supposed to close in the 1^st half of 2018. That really changes the dynamic of the business. To fund this acquisition, they have to sell some assets, which include some California power generation assets which they bought, which were underpinned by power purchase agreements, where the power price they are getting is about half of what the current merchant price is, so those have to get refinanced and re-contracted. Dividend yield of 7.4%. (Analysts’ price target is $33.)

When you have an unusually high dividend, it is sometimes an opportunity but more often it is a sign that the market is selling off the stock thinking there is worse times coming. ALA-T is in a down trend. Until lower lows and lower highs stop, it is in a downward trend. The market may be forecasting a cut in the dividend.

(A Top Pick Nov 10/16. Down 5%.) Now trading at a 7.3% yield and looks like they’re going to increase the dividend in the 4^th quarter. With stocks like this, high quality with sustainable dividend yields, you can keep buying into weakness. When the strength comes you own lots of it with a good yield. They are undergoing a major acquisition, and the market perceives it to be a funding gap on how they are going to fund the purchase price.

A bit decentralized as they operate in a lot of districts, California, BC, Alberta, Michigan, and now trying to acquire a utility provider in the Maryland-DC-Virginia area. Feels the company is misunderstood. Management explained “The market perceives a funding gap for the acquisition, but if we were selling assets right now, the regulator who has to approve the transaction would think that was presumptuous.”, meaning they would think they were getting ahead of themselves by purchasing this asset before the regulator said yes. They are just minding their Ps & Qs with the regulator and have a plan ready to go. Dividend yield of 7.3%. (Analysts’ price target is $33.50.)

Energy infrastructures are going to start to come alive with a better energy trade. They did an acquisition and are pinched a little by the rising Cdn$, but all in all thinks it is going to work out for them. 3% dividend yield.

A good combination of a mid-streamer as well as a utility. They’ve migrated more into the power producer and utility area. They continued to make that migration by making a big US acquisition, which should close some time next year. The stock has been in neutral as investors wait to make sure the deal closes. Pays a good dividend. Will probably move sideways until the deal closes, and then do better after that.

This has gone through a pretty brutal year. He owns this in certain accounts for the income. Pays a 7.2% yield, and that dividend is safe. They have power plants in California that they need to get contracts for, which is a bit of an overhang. But then they made the GWL acquisition, a gas distributor on the east coast. It is going to take time to settle. The stock went down on no news, which is an interesting signal, physically saying that Selling is done. That is an interesting time to pick up the stock. You are getting paid while you wait.

Subscription Receipts. They did a big deal with the WGL in Washington, and there is a bit of pressure there, but positive and the fact that you get your $31 back if the deal doesn’t work, and a 7% monthly income to wait. Dividend yield of 7.3%. (Analysts’ price target is $33.)

Incredibly cheap, and mispriced. The market doesn’t like that they made a transformational acquisition of WGL, the US utility. It is going to have to go through a year’s worth of regulatory reviews, but it will double their earnings, and effectively their yields and dividends will increase in about a year’s time. They beat numbers last quarter. Dividend yield of 7.6%. (Analysts’ price target is $33.)

They acquired Washington Gas and Electric. The acquisition, when it closes in mid 2018, is weighing on the stock. There are subscription receipts that are selling higher than the stock. If it does not go through you get your money back. You clip a dividend along the way. There is a 20% chance the deal does not go through. It is cheap compared to other companies. He has been buying on dips. There may be a concern that they have to raise more equity. It is a well run company and have a history of bringing projects on time and under budget.

Sold his holdings about a year ago because of valuation concerns, when the stock had gotten very expensive. It was trading north of 15-16 times EV to EBITDA. He would continue to avoid this, even with the setback in the stock price.

He said goodbye to it. It is too early to buy back. The most recent earnings went down and are expected to go down again when they report. Cash flow is negative.