Capital Power (CPX.TO)

It is a good entry point. Their legacy business was coal powered generation. They are transforming these plants to natural gas and collecting a termination payment from the province. The yield is close to 7% and the dividend has grown steadily. The strategy is sound and the entry point looks good.

Northland Power (NPI-T) or Capital Power (CPX-T)? This one has a little more non-sustainable stuff in it. As the outlook for that has improved, it has done better lately. He would classify both as in the Hold category, and a little bit lower on the pecking order. (Owns some of the preferreds.)

In the top 10% of his database. Just acquired some new assets and it will be interesting to see how that will impact earnings. The 6.2% yield is significant, but they have significant free cash flow to support it.

They have been in the news recently. They have a lot of coal burning legacy plants. Alberta has regulated coal power out of existence by 2030. There is concerned over stranded assets. The government came to terms with them. There is concern about how this company is going to reinvent themselves. Carbon pricing is coming in Canada. There is too much uncertainty.

The big issue has been the Alberta government and their decision to stop allowing production of power from coal. When that decision was made, this company was hurt the most, which was ironic, because they had the newest coal plant. The big question is; how much is the Alberta government going to compensate them for stranding those assets. There are probably safer dividend paying stocks.

This is one where you are betting on what happens with their coal assets, and whether or not they are successful against the government. 190% payout ratio. He won’t buy this name right now because it is trading at 37X 2016 PE. Dividend yield of 7.5%.

Whenever he looks at an investment, he wants to know if he likes the macro of the sector, the financials of the business, and the technicals. On this one, the technicals are starting to turn around. The financials are okay. The macro is what he is worried about. Anybody producing power in Alberta right now that isn’t clean, he doesn’t know what is going to happen in the future. If they have any contracts with the government, they are all rolling off in the future. He would rather be invested in a clean power producer.

The yield is safe. It is a wait and see, with their coal assets.

Alberta power prices are pretty terrible. This is a good way to play exposure to Alberta power utilities. Their coal powered plants present uncertainty to the market.

Unless there is an extreme overshoot by the market, he has an NAV of $17-$18. They could be compensated by the Alberta government for BV destruction. The dividend is high. He models 49% payout ratio, so it looks pretty safe. The company is guiding to a 7% annual growth.

(Market Call Minute.) Produces electricity in Alberta using coal. The NDP government does not want any more coal, so this is not a place you want to be.

His company has it with a $27 target and as a sector perform. Feels the 6.3% dividend yield is sustainable.

(A Top Pick June 9/14. Down 10.38%.) This is been negatively affected by 2 main things, lower commodity prices and the NDP win in Alberta. There is some speculation that there will be an acceleration of coal retirement power generation facilities. Has been trimming his holdings for the past 6 months.

Look at the dividend and then what the company is expected to make in the coming year and it is cutting it very fine. Can the balance sheet stand the paying out of capital? It is okay, but not fabulous. Earnings projections are sloping off. You don’t have the propellant of increasing year over year results. He hopes it will hold at $21 on the downside. It is muddling through.

(Top Pick Jun 9/14, Down 2.71%) The drop was due to the decline in oil prices. Retiring coal facilities early would negatively impact this stock. Hold for now.