Emera Inc (EMA.TO)

Fortis (FTS-T) or Emera (EMA-T)? His short answer is this one because he owns it. He likes the business. It is a very meat and potatoes, boring utility name. Gives you a great dividend to wait. In the last 52 weeks this is up about 18%, but that is not realistic moving forward. Pays about 4%.

(A Top Pick April 16/15. Down 0.88%.) The story hasn’t changed. This is a meat and potatoes utility name. You’re getting about a 3.75% dividend. On utilities you are generally paying big premiums because of the yield, but on this when you are getting the best of all worlds. Great yield, a valuation that is not overly rich and coming up a pretty good year as well.

Stock vs. Stock. FTS-T vs. EMA-T. He is short both. Utilities are overvalued. They are very levered. EMA-T has more organic opportunity. He would not be in either and is short both. If you have to be long, get EMA-T.

An electricity utility name. Focused in Atlantic Canada, and more recently have gone into the US as well. Along with other utilities, what he likes is the stable income stream and the reoccurring revenues. The risk for these types of names is that they are interest rate sensitive, but the risk of rates going up in Canada is very low right now. 31% of the revenues come from the US, and because they are paid in US$’s they are getting a boost from foreign exchange. Yield of 3.89%.

Fortis (FTS-T) or Emera (EMA-T)? The real difference between these 2 is that one is Western Canada and the other is Eastern Canada. He doesn’t own either. They’re both trading at around 19-20 times earnings, which is a little rich going into a potentially rising rate environment. Between the 2 his preference would be towards this. It has an interesting side in that it is exposed to capacity markets in the Northeast, which just increased their capacity payments significantly higher than what people were expecting, which was a boost to this company’s earnings.

Did an acquisition in the US, which has been helping the balance sheet. As a utility, it is still too early for him to look at it. Has no concerns about the dividend. It looks very interesting and is one that he will be keeping an eye on. His target is $44 on this.

Pays a good dividend of about 3.7%. They are focused on Atlantic Canada and have the capacity to provide about 40% of their power.

Based on the east coast. Had a really nice move, so he doesn’t know if he would be entering it at this point. This gives you a trading range and you want to buy them on the dips. The yield is safe. It is a good utility.

(Altagas (ALA-T) or Emera (EMA-T) as a core stock for the long-term with a growing and sustainable dividend?) Names like this have grown very strongly. He would think the value is in this company rather than Altagas.

An OK time to Hold it, probably a reasonable time to start thinking about Selling it, but probably not a good time to Buy it. If we see economic growth happening in the US, and if the Fed does announce or hints of raising rates, it will be very bad for the utility sector, and this is a regulated utility. The best days are probably in their rear-view mirror for a little while. You are probably okay for a few months and you don't have to do anything dramatic, but certainly in the beginning of the new year, he would be thinking about selling, at least a portion of it.

Has a fairly steady dividend. If we continue to see some of the volatility that we have had, and if it were to get worse, this is a position that he would look to. If you are looking for income with a little bit of growth, this company fits the bill. Fairly low volatility.

Some utilities have been perceived to not be growing unless they are raising their dividend. This one is an exception. They are growing. They should raise their dividend next year. It makes sense to add it here.

Has done very nicely over the last year. This is an interest rate play. If interest rates start to move up there will be a pullback, but for the moment this is a very solid, steady, slow grower, and you are probably looking at an 8%-10% total return of which about half is the dividend. A very solid thing to buy.

An interesting utility with a nice yield to it. It is doing things that are sort of outside the box. They are looking at cables from the new development up in Labrador, to bring Hydro down. Have got the offshore gas that comes in from Nova Scotia. He didn’t buy this because he just couldn’t find enough growth. His model says they need 10% growth with the yield and he hasn’t seen this. It has the potential to get some growth.

Sold his holdings late last year. Operationally this is a great business. Good management team. Going through a $4.5 billion CapX program in the Maritimes. There is value here for a business that is trading 17X, and where he thinks earnings will grow in the mid to high single-digit. It seems a little rich to him. He would be looking to buy this in the low $30s if you could get it.