Fortis Inc. (FTS.TO)

(Market Call Minute.) Very good Cdn$ tailwinds from their US operations, and have been running the business very well.

A good way for investors to get pretty stable dividends into their portfolio. It is going to be a defensive name, which is something you probably want to own in this market, given the volatility. They are making a US acquisition which will effectively increase the growth in the rate base from 5% to 7.5% in 2020. Dividend yield of 3.71%.

This is one he has not bought, because he thinks he gets a lot better return on some others. Also, the yield is kind of low. His company has this as a sector outperform with a $46 target.

Has 40 years of dividend growth. An exciting company all of a sudden with their acquisition in Arizona. A regulated utility with very little exposure to Alberta. Valuation is not the cheapest.

We operate in a world where interest rates are at thousand-year lows. There are a lot of investors who are looking for some kind of security in return, and this company has had a great history of raising its dividend and regularly. A lot of people are buying utility companies for yields. This company is a great way to do that. You could also look at Emera (EMA-T).

Too expensive. Pipelines have had a nice correction; utilities are still overpriced. His model price is $31. He would like to see this back to at least $32.50 before he got interested.

Just acquired a transmission company. The stock then got set back to where it had been. It is cheap and has decent upside potential.

Emera (EMA-T) or Fortis (FTS-T), or any other dividend stock in this market? Paying a dividend in this market is a great thing, however you need to look at the interest rate environment as well as the growth potential for each company. Utility in general is a slow growing business and both companies have made acquisitions in the US. He likes both, but Emera’s yield is a little bit higher and this one’s acquisition looked a little more expensive, and there are probably some digestive issues.

Expanding aggressively in the US. They are growing these assets. The share price has been whacked down recently. He has owned it forever. You don’t get many chances to by this company cheaply.

They will be huge in the transmission of electricity. Canada has its population focused so it is good to see them diversifying into the US. The market was jittery about their recent purchase, but he thinks it will be good or them.

There is a sector rotation happening. This was getting a little too frothy and people were piling into it. Then they bought a US distribution company which they really paid a lot for. The street didn’t like that, which is why the stock checked back. Looking out a year or 2, you are going to be fine with this.

It got knocked around a bit on the acquisition. It is one of the most aggressive companies in this sector.

The utility sector is one of the strongest sectors for these troubled times. Valuation is silly, it is way too expensive on a multiple basis. However, you want to have utilities, telcos and consumer staples companies. Those should be the bedrock of your portfolio.

The recent deal was viewed very negatively by the street. It is a huge investment on this company’s part compared to its market cap. A lot of Americans are going to be getting shares in the company, and are not very happy about it. About 50% of those shares are going to be recycled. The company is being viewed increasingly as empire builders.

Making a big US acquisition which is supposed to be 5% accretive, and to be funded with a little bit of cash and shares. Stock has come off 12%, and thinks there is some concern about further divestiture into the US. Stock has had a good run, so you are seeing them give a little bit back. A name he thinks he would be adding to, given the recent pullback. These are the kind of names you want in your portfolio given all the market volatility, because the utility sector in the US and Canada have been some of the best performing sectors year-to-date. Dividend yield of 4.2%.