Keith Richards Canadian Utilities CU-T COMMENT Aug 26, 2024

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. There is no news that would account for the correction. Dividend stocks may see some weakness if there are rate fears. The stock also fell below its 50-day moving average so this may have caused some technical selling. Unlock Premium - Try 5i Free

Editor's Note: The question was on his preference between T and CU. Total revenue at Telus was up 16% and the capex is down which is good. It is pricey at 25X. CU is a low risk utility and has a very nice dividend and price. Since it has low growth he prefers Telus.

The sector is fairly interest-rate sensitive, so it's sold off. Nothing wrong with it, so you can hold if you own it. But better opportunities such as AQN, FTS, and BIP.UN, and it all has to do with their growth outlook. 

Not sure why stock's dropped. Group as a whole has pulled back because of rising interest rates. With interest rates stabilizing in the past month, stock's played catch up. Good sector for income, dividend safe. FTS is her core utility name.

Likes the recurring revenue and steady revenue streams. One of the more profitable utilities in Canada. Pretty strong balance sheet. Good dividend yield. However, he'd look at TRP instead for more attractive valuation and higher yield.

Low to almost-no growth, interest-rate sensitive. Likes the sector in general, should do well as rates come down over time (probably faster in Canada). So any stock in the sector should get some bump in price, along with the dividend, so you should get a reasonable return.

It is primarily Alberta focused. He prefers Fortis with a strong Return on Capital. Rates should come down and income names should do better.

With rates moving lower, we should be looking at utilities in general. Stock's topped out in last couple of weeks, could be a near-term ceiling. In terms of LNG demand strengthening over time, he'd prefer names like ENB or TRP. Those names are larger and have more sustainable dividend growth.