Fortis Inc. (FTS.TO)

He's avoiding utilities because of rising rates, but Fortis can grow its dividend and he likes it, performing well. Buy at closer to $40.

(A Top Pick Jul. 23/18, Up 5%) He was looking at a really safe investment. 90% of revenue is from regulated utilities. We have seen a rotation into this as the market has gone down. At this point he feels there are better opportunities elsewhere.

(Past Top Pick Sept. 13, 2017, 0% return) A diversified company. They've made large acquisitions in U.S. power. He still likes it and owns it. True, utilities are exposed to interest rate rises, but he has faith in Fortis' management. He likes their U.S. exposure.

Recently added to his position. Offers non-cyclical stability. 97% of their assets are rate-regulated which insulates shareholders from changes in commodity prices and economic conditions. It pays a consistent and growing dividend which will continue to grow at 6% annually in the next five years. Thre's also a $17 billion capital expansion plan. (4.17% dividend yield, Analysts' Price Target $47.43)

He has loved this one. He has not been into it for a while. He got out because of a change to the fixed income market. It really likes $40 as a support. You could probably wait to get in until it touches $40. There is no rush right now.

(A Top Pick October 5/17 Down 5%) He would have thought it would have held in well and now feels it could go a bit lower. These are companies that tend to bottom when the market tops. He will continue to hold it.

This has been a quality Canadian company that has rolled up utilities across North America. Rising rates will put a squeeze on all utility companies. This is a great company; there is no reason to sell it, but he can’t get excited enough to buy it here. (Analysts’ price target is $48)

Emera vs. Fortis Emera doesn't have enough capital to fulfill its growth plans, so they need to raise it while they pay a 5.6% dividend--difficult. He prefers Fortis, which is better capitalized with better growth prospects. But they're both slow growers, not super-accretive. For dividend growth, look to a Canadian bank instead. Dividends: 5.6% vs. 3.9%

It's the Cadillac of utilites. Trades at 17x vs.15x in the group. A solid utility with 97% of assets regulated. Diversified across U.S., Canada and the Caribbean. Rate base is growing 5.5% a year. Expects 6% dividend growth this year and for four years. (4.0% dividend, Analysts' price target: $47.67)

If you want to own it for the dividend you are fine. He is not in the sector as they target a combined return exceeding 10%. Yield 4%.

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.

( A top pick June 6/18, up 7%). Interest rates are probably coming near the end of their tightening cycle and he thinks utilities offer good value with yield. It is a 1 year pick. Yield just under 4%.

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. A better growth rate than the others, and an excellent reputation.

It probably came down too much. They have dividend and earnings growth. You can get total return in the 10 to 20% range over a year. (Analysts’ target: $47.36).

(A Top Pick Oct 5/17, Down 4%) It is a cheap utility stock. They are all down, expecting interest rates to go up. This is now in the past so the stocks are cheap, upside potentials are good and maybe interest rates won't go up all that much.