Emera Inc (EMA.TO)

It is a short for him. It has a good yield but struggles in a rising rate interest environment.

These interest sensitives in Canada he not very bullish on. It has a model price of $34.68 so it is 15% overvalued. He thinks the BOC will have one more hike in them. He is neutral to negative on this one.

A lot of these utilities have had a tough go in 2018. The high dividend payers came down. Things are going well. Debt levels are a concern, however, with rising rates. They need to pay down the debt rather than raising the dividend in these times.

Utilities typically do well over the summer. The US utilities all did well this summer. But are now in an overbought position. The Canadian utilities did not have a good summer. Now seems to be consolidating. If you like the dividend, he would continue to hold during this consolidation period.

Fortis vs. Emera. Emera has more diversified assets. In a rising interest rate environment, who can grow their top line? It appears to be Emera. Because of growth profile and underlying assets.

He likes it. It has sold off more than some of its peers. It is a product of interest sensitive names selling off and they revised downward their dividend growth projection. It is not a game changer and you could still be a buyer here.

Will do well on dividend for a long term hold. He has not been going to the utility sector. Balance sheets are pretty tough. Nothing wrong with the company, just in a sector that is going to have a headwind for a number of years.

This name is caught in the same wave as all the other utilities. Probably has some value if we see interest rate hikes coming to an end and should see the bond market stabilize. Should be careful in this space. He likes this space and valuations right now.

It should be rising this time of year. It's just returned to the February low of $40. Now is a good risk-reward entry point. Seasonality is supposed to start in early-July. If it falls below $40, then it's showing weakness, which is due to rising interest rates. Generally, Canadian utilities are underperforming vs. US utilities.

Fortis or Emera or Algonquin for dividend income, with increases? Fortis. Fortis is a good price in these ranges, history of increasing dividend, good diversified portfolio. Market has overreacted to rising interest rates, and Fortis has been caught in this. Fortis has had a better growth rate than the others, and an excellent reputation.

When a company pays a dividend out and the stock drops by that much, then it is not a move. This stock is quite cheap. These utilities tend to find their lows as the market is finding its highs. He thinks this is probably a pretty good place to be.

Utilities in general are cyclical and linked highly to interest rates. We don’t have to worry too much about yields going too high. But he does not see much scope for growth in the stock for two years. ZWU-T would add some diversification while leaving you exposed to this sector. Both tickers are similar on a chart.

He likes it. It is well run. There are concerns around their balance sheet but feels they will get back to target ratios in the future.

This company had a big acquisition in the US and has a major project along the eastern seaboard into the US. The market is starting to question their dividend growth guidance. Overall, he looks to add to his holdings in the utility space ahead of the next recession in the next 2-3 years. You might see them get a little cheaper first, especially if it trades below $40 again.

He likes the utility space, given we are in the late-rate cycle. Emera is one of the more solid utilities. Valuations are attractive for an entry point. However, these stocks are at risk if interest rates rise quickly.