Fortis Inc. (FTS.TO)

(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.

They have a big deal to buy an Arizona public utility. This is a good deal and provides a little bit of growth. He would actually prefer Bell Canada (BCE-T) over this. This is in the low growth area and will definitely be affected by higher interest rates. He would prefer a pipeline to either of these.

Has grown its dividend at about 4% a year for the last 5 years. Dividend yield of 3.74%. Made a $4.2 billion US acquisition in Arizona. When they make acquisitions, it takes a long time for the deals to close. This one took a year. Their model is that as soon as they announce an acquisition, they raise the equity for it. Spent about $900 million on an expansion on a dam in BC, so there will be a double-digit jump in earnings in 2015. Also, expects their dividends in the next couple of years to grow at a faster rate.

Just doubled their preferred share issue from 300 million to 600 million in order to acquire a US utility. This is been a very reliable dividend grower over the last 2 decades and he thinks this will continue. They do very smart deals in buying utilities in the US in order to grow their earnings. The increase in the size of the offering reflects their popularity. For income oriented investors it is hard to find names as consistent.

(A Top Pick Sept 18/13. Up 12.23%.) He expects it will come back to the $32.75 range and test a breakout. Really good dividend and an excellent balance sheet. 90% of its business is regulated. He has a $40 target on this one.

They completed the acquisition of UTS in the US ahead of schedule. This is a real company changing acquisition. Has increased the size of the company. Feels that people are not really seeing how substantial this is going to be over the next couple of years. Expects earnings to go through the $2 level for the next few years. Dividend yield of 3.86%.