Transalta Corp (TA.TO)

Probably his least favourite Canadian utility and he would Sell if he owned. 7.9% dividend yield is so high because the market does not believe it is sustainable. A number of their operations are questionable as to what they are able to earn on them.

Continues to hold some. They had some issues related to Nat Gas pricing in NW US. They remain committed to the dividend, but the coverage is a bit slim. Tread carefully.

This is a real call on Alberta power prices. One of the issues with Alberta power is that they are overwhelmingly in a coal market and why use coal when you can get cheap natural gas. There are also issues with Centralia, their power plant in Washington state and he would wait until those issues are clarified and re-contracted.

Just reported and numbers were not great but he wasn’t expecting great numbers. Over the years, this company has shown itself to be quite capable of maintaining their dividends on a cash flow basis. Have some pretty good assets and pretty good market penetration in Western Canada.

Trimmed back on some of this. He still likes it. All the pipelines are becoming really strong monopolies because it is the only way to ship the oil out. Hasn’t been adding to his holdings. 7% yield.

Trouble with this company is that everybody believed the dividend was unsustainable, but believed that for an awful long time. These are older, coal fired plants mostly. Thinks that Canadian Utilities (CU-T) and Fortis (FTS-T) are better companies with better models.

Expect there will be pressure on Alberta power prices and they will remain in a range of $50-$55 longer-term because there is some capacity coming on stream. This company has some assets in north-eastern US which has come under significant pressure in terms of the rates they are going to be able to get in the renewal of their contracts. Doesn’t see much room for capital appreciation. The DRIP program is a bit disconcerting as well.

Has been a very disappointing company. Hasn’t owned this for a while. New CEO appears to be applying good discipline but there has been concern in the marketplace about the sustainability of the dividend. Stock is not cheap.

$11.73 model price. Negative 28% differential. Wouldn’t mind seeing some earnings. 7.2% yield that people are falling all over themselves for. $10.75 would be the book value and he would buy it there.

Had some rulings that have been costly however, this is a company that has shown itself willing and able to continue to pay their dividend even if they are not earning it. Thinks they will make the transition and be able to solve some of their problems in terms of meeting the government requirements and soldier on.

Really struggled because of the Sundance plant, which they were forced to refurbish and keep open. That floods the Alberta market with power, which will affect this company because they get the power prices which are coming down. Recently they’ve turned the corner and investors are starting to look out a little bit. He’d rather get something with a lower valuation. 7% yield.

(A Top Pick Jan 10/12. Down 16.22%.) Didn’t anticipate that the balance sheet would keep falling away underneath the company. The positive is that they have a very strong balance sheet and have raised a bunch of equity and have the money to continue paying the dividend. 7.2% yield.

Looking at the 10 year, it keeps going out of favour and doing a run. We are at a 10 year low, but there is probably no catalyst. If you have a 4 or 5 year view, this stock is probably very interesting. There are no problems they are worrying about. There is a cloud over the dividend.

Been under a lot of pressure and now have a “back to basics” plan. Going to try to hedge 70%-80% of their power ahead of time. Yield is about 7.8% and they are looking for about a 8%-10% total return for investors. If you are in this, it’s pretty much for the dividend and not much more. Expanding into Australia for resources so as resource extraction expands, they’ll be a part of it. Doesn’t see a lot of growth so basically it will move with interest rates.

Buffet being in it will provide some optimism. They will try to keep the dividend safe but he would be a little nervous. You don’t have to go here.