Opinions
John Stephenson
Pattern Energy Group
PEGI-T
TOP PICK
Jul 14, 2016
$30.550
Stock price when the opinion was issued
electrical utilities
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BUY
Hit pretty hard by Doug Ford announcement. The selloff was overdone, but doesn’t think Pattern’s projects were cancelled. Have more of a solid backing with partnership with Brookfield. Nice dividend. Pure play renewable energy to own for the dividend. Announcement means projects will be pushed out of Ontario.
electrical utilities
BUY
Is the dividend safe? Stable company. Their price to book is 2.41. (Above 3 is a red flag.) So, they can pay their dividend, yet acquire new projects.Their PE is 17. He hasn't seen any issues with PEGI. As long they keep earning those cash flows and pay that dividend, this is fine.
electrical utilities
BUY
It is a no brainer that reducing the payout ratio to 80% makes it more sustainable. They have a renewable energy utility. They earn a lot of very stable income. You have to be sure they have enough cash to pay out these ridiculously high yields. They are going to keep the dividend constant while the company grows for a while. The payout ratio is a great metric to keep an eye on. He loves what they are doing. This is a great move on their part. He has no problem owning it.
electrical utilities
COMMENT
One of the utilities with the higher dividend at 7.37% right now. You have to look at the level of debt. The big fears from those utilities is that they are over extended and how they get their money. A little more volatile than traditional utilities. This is a great company and he sees huge potential for them to raise money through green bonds instead of issuing more shares and diluting shareholders. You want to keep an eye on debt level to make sure they are going to keep paying the dividend.
electrical utilities
An independent power producer. They have about 3000 MW of basically US based, but they do have some projects, primarily wind, in Ontario and Manitoba. Trading very inexpensively. They have the ability through their parent Pattern Energy Group (PEGI-Q) to vend in new development projects, so they don’t sustain development risks. They are 89%-90% contracted on 15 year terms. It is like a bond, but with a heck of a good yield. Dividend yield of 6.68%.