Northland Power Inc

NPI-T

AQN vs NPI Both companies have similar yields -- around 4.9%. He owns both. AQN-T is more US focused. NPI-T is more international. The dividend with AQN-T is paid in US dollars.

This is a significant holding for them. They just spoke with management yesterday and received some good information on their dividend policy. They have been slowing their dividend growth relative to the growth in free cash flow to ensure the company does not have to go into the equity market to dilute shareholder value – a smart move he believes. He thinks it is undervalued at this value.

(A Top Pick June 27/17 Up 3%) Basically the return has been the dividend. He does not mind being paid to wait. They have had some good success in a couple of international ventures. It is trading at a cheaper valuation relative to its US peers. He continues to hold it. Yield 3%

Likes it. There was concern they didn't have enough growth in the next few years, but NPI thenwent out and secured contracts in Taiwan. Buut that was too far, so then signed contracts in Germany. It pays a safe, decent yield. Conservative balance sheet. They've proved they can bring projects on time and under budget.

Renewable energy is down these days. Before, investors wanted the yield (bonds were paying so little). But now there's more risk-on and a move towards growth stocks, not dividends. So, now is a buying opportunity in NPI and this sector. He would own this for the long term.

Range-bound and is now closing in on its bottom. Your only play is within this range. To trade, wait till it falls closer to $20.

Their European operations are now producing cash flows which they'll reinvest in other projects. The CEO is a big shareholder, always a good sign. It pays a good dividend yield over 5%. Revenues come outside Canada, so it's well-diversified. A solid, good long-term hold. They report earnings tomorrow.

An unconventional utility working on clean and renewable energies. About 2/3 of their earnings come from wind and solar power. It is on trend and they own assets in Europe, where there is large decommissioning of dirty energy assets. A sophisticated developer, but has not been a consistent dividend growth story. He believes the dividend is safe. He is warm to the business although does not currently own it. Yield 5.5%.

This chart is stabilizing, but if credit markets continue to deteriorate he would be cautious. If it trades below $20 watch out. Don’t let it trade another 10% lower against your position.

PKI-T vs. NPI-T. PKI-T has come up from a nice level. He was positive on the stock there and continues to be. It is a little rich now but has been a good dividend payer. NPI-T has not done as well recently. It could be interest rates. They are showing good growth and great cash flow. They have great wind farms coming on and it is just a case of whether it is Taiwan or further things in Europe. They need a partner to keep their cost of capital down.

(A Top Pick January 5/17, Down 2%) A lot of their business in offshore wind in Europe. More projects are coming on like Germany in 2020. They're now bidding on offshore wind in Taiwan with results expected in Q3. Raised their dividend last year. A good, little company. He trimmed back at higher prices, but happy to hold it. There's a lot of market bullishness on European offshore wind power, but competition is now heavy, so he doesn't epxect them to do much more bidding in Europe.

Has a fair amount of growth coming, but utilities will get hurt as interest rates rise. NPI was on sale, but didn't get sold, so there was a sell-off right after that. Over three years, it's a solid hold and you will be fine with it. But don't own it for just a year.

He likes the name. It has become a casualty of the rising interest rate environment. They are very utilizers of capital. They are in growth areas. They can earn returns conservatively. This is a very good name and in the right kind of businesses.

For a TFSA? This builds and produces green energy globally. It pays a 4% yield, which is very attractive. However, the keyword is "Power". It is part of the utility group even though it's a little different, and is going to get painted with that brush. You have to remember that 80% of return is buying in the right neighbourhood. If your view is that interest rates are going to stay relatively low and bonds are going to be benign, this would be great. However the signs are pointing to higher rates, a little higher inflation, and you want something with a little more dividend growth as you go along. He would suggest a bank or one of the big, mature software companies. (See Top Picks.)

This went through a strategic review last year, and the company was really saddled between $23 and $24.50, and basically went nowhere for the whole year until the strategic review got sorted out. It now has huge cash flow coming on from these offshore wind projects. They just completed one and another one is very near completion. From there, what do they do with that cash flow? They already increased the dividend by about 10%. You could see a lot more dividend increases, or they are going to chase more projects, or both. Dividend yield of 5.2%. (Analysts' price target is $27.25.)

This has done very, very well building offshore windfarms, particularly in Europe. As these things come on, the dividend should come on. There is a rumour that it is possibly going to be up for sale at some point. Dividend yield of about 5%.

(A Top Pick Jan 5/17. Up 5%.) When he picked this, he felt the company was either going to get taken out or would be increasing their dividend with a strategy. They raised the dividend, and have a good profile of earnings growth over the next couple of years. After that, they are bidding on wind projects in Taiwan, which is a slow process with about 12 months away before a decision is made. He trimmed his positions. Dividend yield of 5%+.

(A Top Pick Nov 30/16, Up 14%) He still likes it. He believes the dividend can grow substantially. He is concerned about the Canadian dollar and that the economy is slowing. The drivers of energy, housing and new legislation are slowing it down. This is a great way to hold assets in northern Europe. These cash flows will continue to grow.

If interest rates stay low, this company will benefit. They has very, very high-quality assets, both in Canada and Europe. Have carved out a nice position as a large offshore wind producer. Bidding on contracts all around the world at the moment. He likes renewable energy in general, as perpetual cash flow is a very interesting thing. Has a nice yield of 4.5%. A good place to be.

Northland Power (NPI-T) or Capital Power (CPX-T)? This one would be viewed as quite a bit purer as there is a lot of wind in there. Moved up a fair bit in 2016 when they put themselves up for sale, and then went sideways when nothing happened. Now you have an expensive stock treading water to catch up with its own fundamentals. He would classify both as in the Hold category, and a little bit lower on the pecking order.

(A Top Pick Nov 30/16. Up 11%.) He still likes this. They are in the electric generation business. A year ago, they were just finishing up the first project. Now they’ve finished the construction of the last turbine, and it should be in full operation by the end of this year. For the next 10-15 years, they’ll just be spinning cash. Thinks they’ll raise the distribution in 2018. A well-run company.

A very innovative management team. The founding shareholder owns about 30% of the company. He would want a much higher price for the sale of the company. It will be hard to maintain the clip of growth in this company. He would not expect it to move up quickly from here. It will be treading water from here. Continue to sit on it and collect the dividend.

(Market Call Minute.)

A renewable energy independent power producer, largely focused on wind with a little hydroelectric power generation mixed in. They initiated a process to Sell the company, which has been dragging on and on, for almost a year. Investors started getting a little squeamish, so he exited his Long position when he got wind of more capital controls in China. This morning, it was reported, but not announced by Northland, that they were about to end the sale process, and the stock traded up on that news. A very worthwhile name, and he is probably going to buy his shares back.

Big wind generator in the North Sea. He likes the assets. It started as an alternative energy provider in Ontario and then spread across Canada, followed by a big foray into Europe about 10 years ago. This is now starting to pay off big time. Their 1^st wind plant, Gemini, is now generating cash. Nordsee will be generating cash by the end of this year. Just announced a 3^rd offshore wind plant that will be coming on in a couple of years. Dividend yield of 4.6%. (Analysts’ price target is $26.50.)

This seems to have dragged on in the $23 level, and the longer it drags on, the less likely it is that someone takes them out. The company has great assets and great cash flow, so if it doesn’t get taken out, you are probably looking at a significant dividend increase. He took about half his money off the table. If it dropped to the low $20s or the high teens, he would look to add to his position to get back to his previous weighting.

This is basically going sideways, although down a little recently. Reported earnings a couple of weeks ago were fine. They have 2 projects in Europe. One is on and the other will be fully on by the end of 2018. They announced they were doing a strategic review, and the hope was that there would be an announcement made when their earnings came out. They haven’t raised their dividend in the last 5 years, and with this new cash flow they are getting out of the European projects, he would expect that, if they are not selling the company, they will raise the dividend sometime this year. 4.6% dividend yield.

Historically stocks like this do very well from around May right through until October of each year. This is a time when this stock does quite well on a seasonal basis. Technically, the chart shows it is forming a trading range.

(A Top Pick March 31/16. Up 19%.) He was looking for stability and for its yield. He expects to see further dividend growth because of the wind projects in the North Sea, that are now coming into fruition. They’ve just announced another project for later on, plus you get the possibility of something happening because the company is looking at strategic alternatives. Dividend yield of 4.4%.

Has just agreed to acquire 252MW German offshore wind farms. Shortly after they announced this, the stock sold off pretty hard, which he feels was a knee-jerk. This makes it a more appealing takeover target. Dividend yield of 4.4%.

A smaller energy producer. Results have been OK. Most of these names have gotten a bit stretched in terms of valuation.

They’ve locked themselves into some nice contracts over the next 5 years in some of the wind power new developments they’ve got coming from Europe. The dividend is safe. They’ve essentially put themselves up for sale and the stock is pretty much trading in the range of what companies could pay. Maybe an Asian company wanting to get some tax environmental credit. There should be word on the sale over the next month.

(Top Pick Mar 31/16, Up 17.63%) He saw dividend growth from The Netherlands and eventually from German offshore wind sites. They have the capacity to grow that dividend. The company is up for sale, essentially. They have been delivering on time and under budget wind power projects.

(Market Call Minute.) He really likes their business model.

It is an event driven situation for him. They put themselves up for sale. He thinks they want to get a deal done. The market is under estimating what the pricing should be. (Analysts’ Target: $25.60).

An independent power producer, producing 1400 MW. The attraction is the growth in offshore wind in Europe where they have 2 projects currently coming on. One is coming on right now, and the other will be coming on in 2017-2018, which will bump their cash flow by 50%-60%. There is potential for pretty big increases in dividends over the next couple of years. In July, they announced that they were doing a strategic review. One family owns 30% of the company, and the question is, do they want out. There is a potential that the assets could be sold. He likes the company long term, because he thinks the dividends are going up. Dividend yield of 4.59%. (Analysts’ price target is $25.60.)

The key thing to be cautious of is that the company is for sale. He would expect a takeout offer in the next few weeks or months. The question is price. If they don’t sell themselves it could be negative for them.

Wind player in the North Sea. They’ve spent a lot of money building capacity up, and now they are going to start benefiting from the cash flow in the income stream. Dividend yield of 4.99%. He expects significant dividend increases as the cash flow goes up 60%-65% over the next 2-3 years. (Analysts’ price target is $25.60.)

They put themselves up for sale and if they get bought, it will be at market or higher so you don’t lose. The stock dropped because bond yields went up.

(A Top Pick Nov 10/15. Up 26.22%.) Had been purchasing this ahead of what he thought would be some catalysts on some alternative wind projects they were building in Europe. Those have come through. They’ve done a great job of executing. They are now under strategic review where they are thinking of selling the company. There is great cash flow in this business.