Hydro One (H.TO)

The outlook for utilities will improve as interest rates decline. They continue to raise their dividend, and they have a good track record.

Good quality. Likes it, but competitors in the space are a bit cheaper. Trades at 18x. Look to EMA, FTS, or ALA. As beaten-down dividend plays, the whole sector is a buy, but other stocks are cheaper.

Is being hit like all utilities now by high interest rates. Doesn't see a growth catalyst for this stock, so this is really a bond. There's demand for new energy, but building nuclear plants take a long time.

The chart shows a long history of higher highs and lows. It's now testing its last low and will probably find support here and continue rising.

When it was partly privatized, it gave investors an opportunity to receive a yield, which has been consistent around 4%. But they're constrained and can't easily raise rates, though rates have jumped in the past year. This is solid for the yield, but doesn't see capital appreciation given where interest rates are.

It's performed well in the past 12-24 months. Ontario is one of the most difficult energy jurisdictions around. Hydro doesn't offer much growth, but it's stable. The dividend isn't enough to excite investors, so he prefers Fortis and others. It's okay to hang onto shares.

Very defensive cashflow streams. Compared to Fortis, Hydro One has geographical limitations being based only in Ontario. In terms of rising interest rates, it remains low and it is not an immediate concern. Look for a utility that has the ability to increase dividends annually.

He favours Fortis and Algonquin. H-T is a very stable business model. They had aggressive growth projects but they didn't work out. Would like to see more diversification of cashflow since it is very dependant on Ontario. It is a good, durable business. Would not sell it but it may not perform as well as others. Growth platform is limited.