Algonquin Power & Utilities Corp (AQN.TO)

(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%.

It has been a safe utility name that just made an acquisition in the US. It is following the footsteps of TRP-T and others that made acquisitions in the US. There was a bit of a tax ARP. He prefers NPI-T because of its better near term momentum.

(A Top Pick Jan 11/16. Up 7.46%.) Sold a few months after he had picked it, and then bought it back later in the year. He likes its diversity between Canada and the US with the distribution and generation business. You are buying this for yield, not share price appreciation.

If interest rates go up, this is the company that gets hit in this sector. He did not get excited about the price coming off a bit when interest rates went up. It is a great company and now his nervousness is more on the strength of the US$. He would buy if it was not for the macro factors. 5.5% yield.

A renewable power company, and like a lot of Canadian companies, they made an acquisition in the US. There are a few more opportunities in the US. Bigger is generally better in utilities. They just raised their dividend by 10%. This is one of his favourite renewable plays. Their dividend track record in growth has been very impressive. A very, very solid name.

(A Top Pick Jan 21/16. Up 9.72%.) Chose this for solid growth. He believed that yield proxies had more life in them and that interest rates would stay low for some time. He still sees this growing really well, 16% over the next couple of years. He sees dividend growth. The whole group might be a little expensive when there are more exciting alternatives.

Primarily renewable power, and she likes that space. A well-managed company. Quite attractive to some of the other utility stocks out there. 5.1% dividend yield.

He likes this quite a bit. Interest rates look like they are going to go up, but you are getting a higher yield here. He thinks the stock is undervalued. Dividend yield of 4.8%.

They’ve done a great job. Just did an acquisition in the US. They are going to increase their dividend 8%-10% per year over the next couple of years. This could come off further with interest rates. He will probably be looking to increase his holdings in utilities over the next 12-18 months.

An independent power producer. Just made some acquisitions of wind farms. This was hurt at around the Trump election when there was talk of rebuilding coal. A very good stock paying a healthy dividend of 5.1%, which he doesn’t think is at risk. A utility like company which will give you utility like returns.

Just closed their US acquisition, which had been expected. There are instalments receipts that are going to get exercised, which is probably going to create some churn in the stock for the next month or so. This has a good dividend with a lot of growth from the US side. It has been hurt because it has been perceived as a utility play, which are now out of favour. If you are going to buy something in this group, you have to buy growth, and this has the best 12-month growth in the group.

They have a good track record with acquisitions. They just closed an acquisition of a US utility that should give them good growth prospects for the next two years. He is concerned about what happens under Trump with renewable power investments. The other problem is tax reform. He is worried if their tax credits will stay going forward.

A good company with about a 5% yield. Their policy is to try and grow the dividend at about 10% a year. Have been able to grow their FFO by about 11%+. Their payout ratio has been falling, which is good. The only caveat is that if interest rates are going to be rising, you have to be careful about stocks like this. They deal with a lot of debt, so their debt costs are going to be rising. Has been a high dividend payer. As interest rates rise, that tends to be discounted by investors. If he were dealing with this, he would hedge it out by being Long this and Shorting another utility against it.