Algonquin Power & Utilities Corp (AQN.TO)

(A Top Pick March 13/17. Up 9%.) This has been a long-term gem, and he still likes it. Dividend yield of 4%.

A lot of people were looking for yield names, and a lot of names became too popular. This one came on the radar screen, and a lot of people bought it. The performance has been good. Most analysts feel that the distribution will continue to rise. If it’s an overweight in your portfolio, take some money off the table. 4.7% dividend yield.

These kinds of stocks have come to trade on Enterprise Value to EBITDA, which takes in the pre-tax earnings, but is really a measure of cash flow and debt, which is a better measure. He likes this company, but this is not the best entry point. The high $12 would be an OK entry point.

He likes the name. This is a utility. His one concern is that interest rates are very low, and when they start to go back up, generally the whole sector suffers as a consequence. He kind of identified this as a possible Long position, but struggled to find an appropriate Short on the opposite side to hedge it out. Has a good track record of increasing dividends. A good hold for the long-term, but just be leery about interest rates.

He is not convinced rates are going up in Canada. There is still lots of room for this one to grow. This is diversified in that half of their revenue comes from distribution, and half of it comes from generation. Dividend yield of 4.8%. (Analysts’ price target is $14.50.)

This has a DRIP program, which can work very well. Sees about 22% EPS this year and next, and yet it is trading at a very similar multiple to its peers. There is some very good dividend growth of around 8%. They just beat their Q4 numbers. He would add on any sort of weakness.

Probably his biggest utility-like position. It has outperformed the sector for quite some time and has been able to grow its cash flow and dividend handily. 4.7% dividend yield is very attractive.

He likes this. Pays a really nice dividend yield. There are growth opportunities here. Recently did a purchase in the US and will be getting some synergies from there in future quarters. Their last results were very strong and target prices were starting to get raised. Not cheap, but there is going to be an avenue where you are going to see continued revenue growth, most likely dividend growth. He could see 15%-20% total return.

He really likes this name. Be cautious that higher interest rates in the US will filter to Canada and hurt companies like this a little bit. They are growing so well. 21% earnings per share growth is his model. They have a good and improving balance sheet and growth from several sources. You should continue to own it and use weakness to add to it. He is forecasting 8% dividend growth every year. They beat Q4 estimates. (Analysts’ target: $14.25).

2017 is probably going to be a pretty decent year for this company. It is a combination of an unregulated power developer as well as owner of a lot of regulated utilities, especially in the US. They’ve done very well with a strategy of acquiring smaller orphaned utilities, managing them better, and passing on some of the tax synergies, being a Canadian holding company. At some point, when it gets big enough, there will be less accretion continuing, but for 2017-2018 they have more than enough runway for growth. Have been growing dividends very rapidly.

Thinks the 5% dividend is safe. You have to look past the dividend and at the fundamentals of the business. Their business is 50% generation and 50% distribution. On the generation side, they continue to reinvest. On the distribution side, they continue to grow their customer base.

What makes this a little exciting is the renewable energy, and they’ve grown their capital quite a bit. In 2010 they only had $1.2 billion invested capital, and now have $6.1 billion. Quite a bit of growth in a short period of time. They’ve done some acquisitions, and at the same time their revenue and cash flow has grown. Valuation still looks cheap. Dividend yield of 4.9%. (Analysts’ price target is $14.25.)

(A Top Pick Jan 13/16. Up 19%.) He still likes this and has been looking at possibly adding to his holdings. Good dividend grower.

Payout ratio is 50%. A “sleep at night” stock meaning it has a low beta, volatility is half of the market over the last 5 years. Year-over-year sales was up 9% in November and earnings were down 31% and down 21% in the coming quarter, but are expected to grow from $.42 to $.65, a 54% lift, against an 18 PE giving you a .33 PE to growth. A PE to growth that is less than 1%X is typically viewed as attractive. Ranks in the top 25% of his database. Enterprise value to EBITDA is 13X, which is pretty reasonable. Thinks there is a pretty secure future. Dividend yield of 5.2%. (See Top Picks.)

Revenues have skyrocketed, but at the same time so has their debt, a danger signal. They pay a very healthy dividend and have a lot of good assets. Lately, utilities have done pretty darn well, but they come into favour and out of favour. If he owned this, he might consider selling it. He would look very carefully at the debt load and ask himself “what if”, and that would be somewhat worrisome. Dividend yield of 5.2%.