Fortis Inc. (FTS.TO)

All the utility stocks have had a rough go this year. They dropped because of an expectation that interest rates would rise quickly. The stock has not bounced back even though interest rates have not risen as quickly as expected. He likes Fortis’ track record, their record of dividend increases and the strength of their management. A company like this will not double overnight--patience is required. They were one of the first to move into the US so there might be some growth from that. Primarily, though, this is a defensive name that will outperform the market when the market goes down and will generate steady income. If rates rise faster than people currently think, its price will suffer. (Analysts’ price target is $48)

There is a relatively tight $40 by $44 trading range. If it drops below $40.60, he would get out. He sees resistance at $44. Hold it for the dividend. Yield 4.1%.

A regulated utility. The tier 1 of the complex. Likes the way the company is set up. Negative $1.2 billion working capital. (Analysts’ price target is $48)

It is a great company. It is a growth utility. Because they are interest sensitive and interest rates have moved up, they have come down. There is nothing wrong with the company.

(A Top Pick Jul 21/17, Down 2.34%) The interest sensitives have been weak. Everyone is losing on the interest rate bet.

They're raising $500 million to fund their growth projects; they don't have enough capital growth to fund them. They get into a cycle: they increase their dividends to drive the stock price higher, make acquisitions, then buy more stock, then increase their dividends and so on. It makes it look like things are working out, like Enbridge. They're highly levered. They're not sufficiently funding their business. They sell more stock, but then they have to pay more dividends. If interest rates take a big hike, dividend stocks like this will be a disaster.

He owns both Fortis and Emera. They are attractive, stable, dividend payers with similar drivers. He slightly prefers Fortis.

(A Top Pick April 12/17 - Down 4.4%) Has come off along with all the other interest rate sensitive stocks. She thinks it is overdone here. She would be buying here. Electric utility company. 60% of its earnings come from US regulated. Very stable cash flow streams. Yield of over 4%.

A core holding. Diversified geographically across Canada and the U.S. across different jurisdictions. Rate-based growth of 5% for the next 3-4 years and dividend growth at 6%, plus half-billion-dollar projects which are added gravy. (Analysts' price target is $47.22)

Shares have been under pressure, as has anything interest-rate sensitive, over the past few months. Fortis is different from the pipelines and other energy-focused stocks because it is an all-contracted utility. However, continuing raises in interest rates will keep putting Fortis under pressure. There is nothing wrong with Fortis but it is not yet cheap enough. For dividend stocks, he prefers something like Enbridge and Inter Pipeline.

(A Top Pick Feb. 1/17, Up 6%) Part of the rising interest rate environment. US tax reform will hurt Fortis for the short term, but long term, Fortis will do well. Continues to like it at these levels. Selling at just over book value and it's highly profitable. Won't be a serious downside from here. In an uncertain world, is a good name to hold. You're paid to wait. 4% dividend.

Is this a buying opportunity? He thinks a lot of people would say so. Many of the utilities have been punished with the higher interest rates unnecessary. There is still always the pressure if interest rates continue to move up.

(A Top Pick February 17, 2017. Down 2.63%). It pays an attractive yield, over 4%. Pulled back because of rising bond yields. She still likes it and still owns it as an income stock. It offers a stable cash flow. They are growing in Canada and the US and expect to increase their dividend 6% every year into 2021.

In the same class as Emera, squared. Fortis has increased dividend 46 years in a row. Dividend growers do the best over time. Can safely own both Fortis and Emera.

Dividend will go up as more projects go online. Valuation is reasonable at 16x, despite a fear of rising interest rated. Strong fundmantals. All its energy is contracted or regulated. Comfortable to own this.