Fortis Inc. (FTS.TO)

Emera (EMA-T) or Fortis (FTS-T)? These 2 are new plays, so they behave similarly. This one is the winner. It is retesting old highs. The chart shows a whole series of higher lows. Buyers are willing to pay progressively higher prices for it. Any 2%-3% retracement would be a good entry point.

Recently, some of the defensive areas have been leading the market over the past few weeks. Typically that is a warning signal. It confirms his belief that we are going to enter into a period of consolidation. Everyone is getting defensive when the equity market is going higher. $43 is the level of resistance. The period of seasonal strength for the summer months, between July and all the way through to Sept/Oct. would be the time you want to be picking up more of this, the time when you want to become more defensive.

For a child’s RESP? For an RESP, it is a one-time investment and this is a stable company and will deliver fine dividends over the longer-term. However, he believes there are other investments that can grow at a faster pace. The dividend yield is sustainable. A little more indebted than he would like to see. Dividend yield of 3.74%.

A diversified international distribution utility holding company. 25% dividend payout ratio. Reported a 15% earnings surprise on Feb 16. Sales are up 11% year-over-year, and the growth margin grew 7% year-over-year. Free cash flow was up 44% and ROE is 8%. 3.7% dividend yield. (Analysts’ price target is $48.55.)

She likes it for the income, growth and the defensive nature of the business. They just bought ITC corp. which is out of the US and expands their presence there. ITC is a regulated electric utility. Over 60% of FTS-T’s earnings are going to be coming from the US now. They have good visibility post- the acquisition to grow their dividend 6% per year until 2021. It has lagged the market, so all in, you should get 12% on this name. (Analysts’ target: $48.55).

He does not know what the price will be a year from now, but they WILL raise their dividend. The dividend is tax preferred. (Analysts’ target: $48.09).

(A Top Pick Feb 29/16. Up 16.27%.) The 46th-47^th year they’ve increased their dividend. A company he plans to own forever. It doesn’t get much more sustainable than gas/electric distribution, and they are one of the best in North America.

A growth utility, and has been growing in the US quite successfully. Has also been growing its dividend consistently. The negative side is that should interest rates move up a lot, people will move over to bonds for the same rate, and not have to worry if the company is going to do well or not. In the meantime, this company keeps growing its dividend and growing its profits. As part of your portfolio, you should own stocks like this. It is a defensive stock, and you want a mix in your portfolio.

Has taken some profits out of this area until he sees exactly where interest rates are going. If buying for yield, the yield is okay, but there are other places with higher yields that have just as good growth prospects. He likes their philosophy of accretive acquisitions. Expects you will be able to buy this in 6-12 months at a lower price.

A company that has made a few major acquisitions, but very successfully. When they made their first large acquisition in Texas, the Texans didn’t think they were going to be as successful as they have been. In the last year, they just closed the acquisition of ITC, a transmission company. This is a company that is well diversified, not only in its own industries, but across regulatory regimes, with a big solid footprint in the US. Dividend yield of 3.86%. (Analysts’ price target is $48.30.)

A great company. As a Canadian, if you have a normal portfolio, you are going to have some utilities, and this could definitely be one of them. His calculation of the cash payout ratio comes out to only 30%, which is actually low. From that perspective, they can continue their dividend. He would like to see their working capital position get a little stronger.

This looks like it has plateaued. He wouldn’t add new positions, but if he owned, he would take some off the table.

His only concern is if there is enough growth and dividend to chin the bar. The sector has been sideways. If rates start to rise, some of these companies have a lot of debt, which means the cost of carry when it rolls over is going to be higher.

Interest rates may already be priced into this. We know that at some time rates are going to go up and make utilities and REITs less attractive. At the end of the day however, this has a lot of growth projects in the hopper. Also, don’t forget, this is a regulated utility. As bond rates rise, they are allowed to go back to the regulated board and ask for higher returns on capital, which means they can increase their pricing. Feels the best years are behind this company, but you probably can still earn an outsized return owning this, versus a bond, cash or preferred shares. He would definitely hold this or buy on dips.

He likes it and would buy it here. They did some interesting acquisitions. 93% of it is a regulated utility. He thinks they will expand into the US. They will do well unless interest rates rise a lot.