Fortis Inc. (FTS.TO)

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.

Nothing wrong with this one, and has been a really good name for investors, because it has been defensive. However, we are in an era where you are going to see growth in the US, and to a lesser degree Canada, and the economy is coming out of 2008-2009 financial crisis in pretty good shape. As a result, he doesn’t think you want to be in something that is very defensive. Utilities are the most defensive, because they are monopolies, regulated and have limited growth. A 1% move in Canada could reduce the price of the group, between 10 and 15%. He would be looking to take money from this.

(A Top Pick Nov 14/13. 20.39%.) This has been a fantastic name. A little overbought right now. Great space. Highly regulated business. This has a fortress balance sheet. It could pull back to a support level, but he expects there could be buyers there.

If you look at most of the utility and pipeline space in Canada, they are trading at or near their 52-week highs. Their valuations are extremely stretched. This reflects that it has been a good place to hide out in uncertain times, certainly in 2014. The big story has been how last year the worst performing sector in the S&P was the utilities, and this year they are the best performing sector. Doesn't offer growth.

90% regulated, so it is a good place to seek shelter from the storm. Also, has the advantage of having $4.2 billion of rate-based expansion within their existing asset footprints within the next couple of years. He is modeling EPS growth of around 8%. It has a 53% 2015 estimated payout ratio, so you are going to get paid this nice dividend. There will be some dividend growth. Not too expensive.

Sold his holdings when they made a deal in the US. He didn’t really see the synergies. Has never disappointed shareholders in the long-term. A serial dividend increaser. Very fair valuation. Valuation was too rich for him, given its low growth. If it fell, he would look at this one again.

For many years this was a laggard amongst the utilities. They made a US acquisition. One of the few stocks that have been going up lately and he feels this is in recognition that its rate base as a utility is going to go up significantly over the next few years. If you added in the potential for some LNG projects, it could even be higher. Over the next few years he expects there will be more dividend increases.

Don’t sell it at these levels as you will get 10% overall returns including the dividend.