Altagas Ltd (ALA.TO)

(A Top Pick Jan 16/15. Down 15.18%.) This is really a hybrid utility/midstream type company. About two thirds is a contracted utility like business; power generation or gas/electric distribution or “take or pay” contracts for their midstream. A small portion of their business has commodity exposure, but that tends to shrink over time. This is about sustainability of the cash flow streams. Good disciplined management. Less than 15% of their business has commodity price exposure. 5.98% dividend yield.

They are bottom shopping and for a good reason. He is concerned about what he is reading about infrastructure in gas and in particular LNG. He was very bullish on LNG going back 10 years. Now nothing has happened on the west coast, however.

Owned this in the past and pretty much keeps an eye on it. Made acquisitions of 3 natural gas fired power plants in Northern California. These will add some diversification. Management has done an excellent job of growing the company and of growing the dividend. Thinks this will continue down the road. It is on his radar screen and ranks very well in his process.

Considers this a utility as it has a 3^rd gas distribution, a 3^rd electrical power generation and a 3^rd of midstream assets. Very stable earnings and revenue going forward. If you are looking to get a rebound in energy without having to take too much of a downside from commodity pricing, this is one area that you could put money to work. It is one of the companies that is going to perform the best when we start to see some of the LNG finally come to fruition in Canada.

Comparing it to junior producers, it has held in well. It has been expensive and he has never been high on buying this. He would be cautious in this group, as he thinks there is more downside to go. Dividend yield of 5.4%.

This stock, along with Keyera (KEY-T) and Pembina (PPL-T), has not performed well. The one difference is that this company really is more of a stable cash flowing entity. They have significant Run of River projects and are going to materially increase EBITDA, in fact double it, within the next few years. It is fully contracted and fully funded. The Run of River projects are underpinned by a long 20-25 year power purchase agreements with governments.

Likes it. They brought on 2 hydro electric projects recently and the cash flow has help them. They are well positioned longer term. A significant dividend yield.

It’s a well run company. They all pulled back with the weakness in crude. She prefers PPL-T and IPL-T in the space because they have a higher yield.

A very nice story in terms of growth. What makes it unusual is that it is viewed as an energy stock, but their growth investments are as much utility as they are in things that are related to energy. Recently they’ve been hit by Alberta power prices, however they are putting on dams in BC, which are traditional utility type revenue generators. That offers stability which you just can’t find. Good yield of about 4.5%-5% which can grow over time. He is looking at this one.

Suffering along with all the other Alberta stocks, but he doesn’t see the situation deteriorating for them to any great extent. Thinks the dividend is safe and sustainable. The long-term aspects relating to gas remain in question. Gas exports seem to be a foregone conclusion, but when?

A core holding. He likes it here. It sold off about $6 this year. A growth rate of 15% is being priced in by the market. Below $40 is a good entry point.

They have long term contracts with solid blue chip companies for a product at a fixed price. Well managed, good balance sheet and good access to the debt markets.

(A Top Pick Aug 6/14. Down 18.81%.) Has held up reasonably well. It had looked like the LNG thing was going to move faster. They have the only natural gas pipeline to the coast. Also, have some other nice energy assets.

People don’t appreciate how much their business is going to change in the next 2-3 years. They have very significant “run of river” power generation assets that are going to significantly affect an increase in cash flow and operating profit. Those “run of river” assets are secured by 25 year power purchase agreements that are indexed to inflation, so there is very little commodity risk. The commodity risks that exist are going to decline significantly. Part of the reason the stock has been punished versus some of the other names, is that it tends to be perceived as having more commodity price exposure, and he doesn’t think that is the case.

The payout is about 45% of cash flow. They recently raised their dividend about 9% and he feels this is sustainable. Growth projects coming in will allow them to grow their dividend going forward.