Fortis Inc. (FTS.TO)

It has just under a 4% yield. They acquired a fully regulated US electric transmission company. They expect to close the deal Oct 14^th. Then their shares will trade in New York as well. They increased their dividend for 43 consecutive years and forecast the dividend growth through 2021.

A good name. They have just picked up ITC Corp which is nicely accretive. $0.49 EPS over the next couple of years. Trading at around 18X versus its five-year average of around 19X, versus the peer average of around 21X. The only concern he has is that there is an administrative court decision that is lowering ROE of such facilities as ITC to around 9% or lower. However, he thinks that will be overturned. All in all, this is a nice stock to be owning at this level.

Fortis (FTS-T) versus Enbridge (ENB-T) versus Telus (T-T)? He has just come out with a new portfolio which has 13 infrastructure oriented stocks. All 3 of these are in that portfolio. The major reason is because of the predictability of dividends long-term and excellent management. This one has a dividend growth target of about 6% a year for the next 5 years, which he thinks is fully achievable. It is one of the top 15 utilities in the US.

Had just bought this in the last month for her client portfolios. It has an attractive yield of about 3.7%. They just announced an acquisition in the US of ITC Corp. which they hope to close by the end of the year. That acquisition is going to be accretive. The company has increased their dividend close to 40 years.

He likes it. Investment went into the company recently. There is a drag on return on capital because it takes time. The rate of return is lower than he likes to see, but suspects that is because of the lag after the investment. Don’t worry about the short term weakness.

(Market Call Minute.)

They have been busy over the last couple of years expanding. As they make acquisitions and as their cash flow comes through they will grow. They have the longest streak of almost 50 years of paying a dividend. As long as earnings and cash flow is there, their market cap will grow.

Emera (EMA-T) or Fortis (FTS-T)? He is not that well versed on the individual specifics of each company, but his general view is that it is the safe stocks, all of the businesses that are perceived to be the least economically sensitive, that are what is stretching the values of the marketplace. When you look at the TSX at 20X earnings and the S&P 500 at just below 20X earnings this year, you are generally speaking of utilities. The reason is that people haven’t had any yields in bonds, so they are stretching for yield by dipping into bond equivalent stocks. He wouldn’t be a buyer of these types of businesses right now.

This is for those seeking income. It is not an exciting company. A regulated gas and utility company. Based out of Newfoundland, but they have operations across Canada as well as the US. Dividend yield of 3.5%, and thinks it is going to grow at 6% from now through to 2020. Recently announced an acquisition of ITC, a US-based regulated utility, which she feels will be accretive to earnings going forward.

(Top Pick Aug 20/15, Up 18.58%) A good yield, defensive stock. It has a set valuation channel. He was quite lucky to catch this one off channel. It is getting expensive now. There is a desperate search for value and this is a messy market in which to find anything of value.

(A Top Pick May 17/16. Up 7.94%.) This remains in an upward trend and seasonality goes from June right through until November. Technicals are still positive. This is a winner, so stick with it.

The challenge with all these quasi-utility names is that they have had a huge run up. Feels the sector is significantly overvalued and he has been trimming for a couple of months now. You have to be very careful, because they are pricing in perfection.

(Top Pick May 17/16, Up 11.21%) The period of strength is until the end of October. It just broke a multiyear high. Continue holding until October.

Pays out a good distribution. They make big acquisitions. The past 2 have been outside of Canada, which will take a while to digest. Once they get going, it’s very similar, slow and steady. They continue to increase their dividend. Feels that for the next year or 2, interest rates are going to stay low, which is positive for utilities.

(Market Call Minute.) Has US exposure and has been doing everything right. There is more to go on this. He has a target price of $48 on this, which he thinks will happen over the next couple of years.