Algonquin Power & Utilities Corp (AQN.TO)

Along with a lot of other utility stocks, this has gone on a tremendous run, especially in the 2^nd half of last year. Have some smaller projects that they’ve been able to bring on and they have had one of the most successful years. A great stock to hold. He owns this through his position in Emera (EMA-T), which owns a significant stake. Nothing wrong with Algonquin, but the valuation might give you a bit of a pause.

Dividend is absolutely safe. A nice stable business model. CEO has a great track record and he thinks they will continue to grow out the business model. The dividend could grow 8-10% over the next couple of years and cash flows will grow to support that. They just did an equity raise to shore up the balance sheet.

Just added a bit to his portfolios. It is a good story. Yield of about 4%. He likes the utilities. They are being built. These make a lot of sense. His company has a $10.50 target on this a year out.

He is concerned about the interest rate sensitivity. But it makes sense to own this one. Decent growth and profit prospects.

They are now declaring the dividend in US$’s. As a Canadian recipient of that US dollar income, you don’t know for certain what your payments are going to be. For some people, having a US income is a good thing. On a longer-term basis, this company did cut their dividend, but are slowly restoring it. Have some interesting growth potential with the pipeline going into Massachusetts. A very attractive kind of portfolio holding.

This has been one of his favourite stocks. He sees their free cash flow rising 30% compounded annually over the next couple of years. This is from new projects coming online and future rate base hikes. Sees them paying a sustainable 4% dividend, anchored by a 65% payout ratio. He models high dividend growth of 11% compounded annually. It still trades cheaper than its peers.

(A Top Pick Oct 2/13. 45.6%.) This is an interest-rate call. Also, based on the view that markets are not going to be easy over the next 12 months as they were over the last 12. This is a power/utility, a kind of gentle place to be. Yet they've got 30% adjusted earnings growth that he models over the next couple of years. Cheap at 8X versus its peers of around 7.7. He models a 10% dividend growth over the next couple of years. Dividend yield of 4.39%.

(A Past Pick Oct 2/13. Up 45.38%.) He is restricted and can’t make any comments at this time.

Just hit a new high in the last couple of days. Has been rather a dull stock lately. Pays a reasonable dividend. Has a mixed bag of assets, including water plants, sewage plants in Arizona, power plants in Ontario and in the US eastern seaboard. He keeps hoping somebody will take the stock out. A relatively safe investment.

(A Top Pick Aug 16/13. Up 23.13%.) He is starting to get concerned on all his utilities, and is starting to put 5%-10% stop losses on them.

Rising interest rates would be a negative headwind, but it will be for any utility and any equity stock from a valuation perspective. In a rising interest rate environment you want to look for businesses where they can grow their free cash flow and dividend in a measured pace that offsets the rising interest rate impact on valuation. He thinks this is one of those names. Have a unique 2 prong strategy where half the business is a fully regulated utility, and the other half is a contracted independent power generation business. Management has done a good job. They have indicated there is potential of up to $2 billion of incremental projects they can take on. If so, you are looking at a stock that is probably worth $12-$13 out in 2017. If you can get this between $8-$9, you will get a 12%-15% total return over 2 years. Yield of 4.2%, which he expects will be increased every year.

Always look for a faster growth than peers. Sees them growing at 29% over the next three years compounded annually. Expects dividend growth as well.

The utility space is great if you want growing dividends. Assets are regulated, and a company has the ability to price its long-term assets and good cash flow. This one has been doing a good job, especially in the renewables area. He tends to go to larger utilities. There’s no reason why the dividend can’t continue to be increased.

This has solar and wind facilities, but are not a major factor. In most cases, they had government subsidies to help them into the area, but he is not clear as to whether these go on forever. Reasonable yield in a relatively stable company.

It is an interest sensitive stock. He bought back cheap when it was beaten up. It is one of the good investments in the renewable energy sector. Thinks you will see the growth phase resume. He is a regular buyer of this stock on weakness.