Fortis Inc. (FTS.TO)

Fortis (FTS-T) or Emera (EMA-T)? The real difference between these 2 is that one is Western Canada and the other is eastern Canada. He doesn’t own either. They’re both trading at around 19-20 times earnings, which is a little rich going into a potentially rising rate environment. Between the 2 is preference would be towards Emera.

He sees some upside. You get stable growth in earnings and cash flow. It is reasonably valued. It is interest rate sensitive. People pile into it if they want consistency in dividends and dividend growth. Total return should be 5-8%, including 3.5% dividend.

Thinks there is limited upside, and the dividend growth is not going to be all that meaningful. This company has been doing huge, huge transactions trying to buy assets in the US to add a little bit of growth. You really have to wonder whether it is worth it. This has not gone up because it is a huge growth machine, but because it is a yield machine.

(A Top Pick May 7/14. Up 24.41%.) Continues to like this. Had a couple of acquisitions in the US in the last couple of years that are really coming on stream now from an earnings point of view. Earnings are going to be up 20% plus this year, and it is likely they will be increasing their dividend a little faster.

(A Top Pick March 7/14. Up 30.63%.) Made a big acquisition in the US, which is probably the point where people were having doubts. This was a game changer for them and gave them more exposure to the US. The foreign exchange has certainly worked in their favour. Good management. Thinks the 3.5% dividend is very safe. He continues to hold, but wouldn’t be adding to his position at this price.

Hold off buying it until you see how the rate picture unfolds later this year and see what the impact is on the high PE income stocks will be.

Utilities tend not to perform well at this time of year. They are now starting to come off. As a utility, this is more defensive, so you want to take a more cyclical approach at this time of year. This has a rolled over and is now starting to underperform the market. You want to go more towards this in the summer months. If you own, take your profits here.

A regulated utility, which typically do well when the economy is weak and not growing, because they compete against other fixed incomes or other yield investments. Because it is so expensive to produce electricity, the government has appointed a Public utility commission, which essentially regulates this business. There is very little growth generally speaking with these investments. A wonderful place to hide. If the bank of Canada starts raising rates, then you would want to exit this stock. He thinks that would be towards the back end of this year.

(A Top Pick Jan 3/14. Up 36.5%.) Still likes this. Took half his position off the table at around $40, but still has a huge representation in the utility sector. If this came back down to its trend, he would buy it back, but he doesn’t think that is going to happen.

One of those solid utilities where there isn’t much to worry about. This is a steady grower. He would add this to a conservative portfolio, but because the dividend is lower he prefers something with a higher dividend. His company has this as a Sector Outperform with a $40 target.

Has done some acquisitions which will fuel some growth and should field better dividend growth. They announced a 6% dividend increase in December, which is about double their run rate than it has been for the last few years. Looks pretty good going forward.

She doesn’t have this across most of her accounts, but only in some accounts that really need income and that want a Canadian focus. For an income oriented investor who wants a very defensive play, you could buy this here. The company has actually got some projects coming on board that will start contributing to their cash flow. The universe of dividend paying stocks of 3.5%-4% plus has shrunk, so she thinks investors are going to re-examine this and put some money here. Yield of about 3.5%.

(A Top Pick Jan 3/14. Up 34.86%.) He took half of his position off the table, but still loves it. A really good company. He sets out a price target, and if he achieves it, will either pare off some of it or sell it entirely.

This actually got up to its FMV a couple of years ago, and then set back. Subsequently to do that, the stock has just kind of soldiered steadily, steadily, steadily forward. It almost reached its FMV recently, when it got up into the early $40’s. Getting to the point where he would expect it to have another set back, but maybe not yet and may give you a little bit more potential in the short term. Longer-term, be a little bit cautious.

(A Top Pick Nov 14/13. Up 30.77%.) Chart shows it has really gone parabolic. He would expect it to come back into the range of $35-$37.50. This is in the right space.