Hydro One (H.TO)

A pretty defensive stock, almost a bond proxy. A very stable, regulated utility in Ontario. Growth that can be expected is much lower than what you can get typically, so you are looking at a GDP type rate base growth. They also have a strategy of acquiring smaller utilities across Ontario. He would buy this if you are looking for very, very low risk and volatility. Just clipping dividends with a little bit of growth over time. 3.5% dividend yield.

He has Emera and EMB-T instead. H-T is not for him. Part of the problem is that the government will be a constant seller of the stock. He would feel better if the government sold all of it.

The market has responded very, very well to the stock. IPOs have been mixed in the past. Some have started very, very weak and have gone on to become tremendous companies.

This is a core holding in Canada. You want to be invested in hydro clean power and avoid Alberta coal at all costs. The only negative he could say about this is that the government may sell some of their shares at some point. Dividend yield of 5.6%.

It is fine. There is a strong influence of weather. You have to be prepared to accept that you might get a warm winter, which we are going through. But they are blue chip. The majority of the stock is held by her majesty the Queen. It is a blue chip core holding. About 6% is a decent yield.

He stays away from new issues. It’s an area where you have increased risks. There is no history with management or how it is going to react in the market. Doesn’t rank well in his program being in the bottom quartile, partially because it doesn’t have any history.

This was a pretty successful IPO. Price has gone up a little, and they seem to have the right management team in place. The biggest risk is that the majority seller has indicated they are going to be selling down their position, within this provincial government’s mandate. Also, it is a fairly aged infrastructure, and there are going to be some capital requirements to get that back up to snuff. This will come about through increased spending and borrowing, or there are going to be further rate increases. There are better companies you could own.

He can’t make a technical comment on this specific stock as it has only been trading for about a month. However, on utilities, they don’t do so well in January to March inclusive. Not a bad time to pair with a short on utilities versus the overall market. The best time to be investing in utilities is in the summer months.

He bought the IPO. He thinks it is ahead of itself a little bit. He is waiting for weakness to buy more. There are 70 municipal utilities that they could purchase.

Loves utilities, especially in Canada because he doesn’t feel interest rates are in a rush to go up. He didn’t buy into this on the new issue, primarily because it is difficult to value companies when they are just coming to market. He is looking at it. Likes the name and likes the space they are in, but he is waiting to let 3-6 months go by and let the stock settle into its right valuation. If you own, you are going to be fine longer-term.

This is a new issue and he always shies away from new issues until he sees how things trade for a while. Also, there is a different culture in companies that are owned by governments, as compared to private sector companies. When you buy this issue, you are buying that culture. You are buying the union, the management and complacency because they can always pass on costs to the end consumer.

He would wait to see how it shakes out. There has been a lot of hype and popularity around the issue, and it was many times over subscribed. Expects there will be more issues over the years, so there is a supply of stock that will keep coming out.

Didn’t take any of the new issue. This was a 4% yield, and he thinks it is safe. He is looking for growth with some yield, and this one is only yield. If you are looking to buy this for a fixed income type of investment and just to have in a portfolio and are happy with the yield, it is OK. You should wait for it to pull back a little.

He took as much of this down as he could, but not because it look that good. It was a little cheaper than its peers. Growth rates were a bit of a question. The dividend looks good. Wait for a little bit of a pullback. There are better opportunities in other names such as Canadian Utilities (CU-T) or Transalta Renewables (RNW-T). Thinks the dividend yield will be about 4%.