Capital Power (CPX.TO)

Red flags: they're shifting away from coal energy--and this will take time--and their dependence on Alberta energy. Instead, buy AQN, which pays a regulated return, though buy on a pullback, and it's done a great job growing. AQN is his favourite in this space.

CPX vs. Transalta They're transitioning away from coal to natural gas, wind and solar.They've executed extremely well, but he prefers Transalta for its valuation--and Brookfield could buy Transalta. Both companies are well-run.

It's the top-performing Canadian utility yet little known. Has momentum. You're paid a safe, big dividend pl;us modest price growth. It plays into the carbon tax. CPS's assets are gas, wind and solar which are higher-cost commodities to produce, so the carbon tax will hit traditional forms of energy and benefit CPX. He sees a 2-3% upside plus dividend. Pays over a 6% dividend.

He holds this in his dividend portfolio. Its yield is over 6% and it has room to grow with the Alberta recovery. He described this as the kind of stock that he prefers to Algonquin Power and Utility (AQN-T).

The risk-off environment has benefited the utilities. He sees a sluggish growth environment for 2018/19. Their balance sheet is very good. It has a 7% dividend which is safe. It is a 46% stable payout ratio. He forecasts 6% earnings per share growth. Sell a put and get a premium. Then own it and get the dividend.

When interest rates are rising, you want a company with a growing dividend and this one has it – although it is not growing rapidly. The dividend has been growing at about 6% per year. The share price has been falling and he does not see the power sector improving. If you own it for the dividend, it is safe. You could be passing up on better opportunities.