When you talk about Canadian power companies you pretty much have to also talk about them as utility companies as well. If that doesn’t strike you as being a good investment then i’m not sure anything ever will. That is especially true when you are talking about the likes of Atco Group(ACO.X non-voting shares), Fortis Inc(FTS), Hydro One(H) and Emera Inc(EMA). Now I know that these are only a few of the companies in the sector but they are some of the biggest and most profitable. Not to mention they all pay a pretty decent and safe dividend, I mean how hard is it to say “no” to getting money back from a service you use 24/7 am I right?
Now, here at Outsider Trading we always say to invest in the biggest and best in any industry that you decide to invest in and this is no different. All of these 4 companies are fairly cyclical in some form, I mean here in Canada we have “four” seasons. Mostly its just winter(prime time for heating your house), spring(what’s that? Still heating your house?), Summer(better turn on the A/C twenty four seven) and Fall(what’s that? The heats back on?). These 4 companies are cyclical in the sense that they only seem to take big dips when there is a global recession, otherwise they are trucking right along breaking all time highs.
We basically just got out of the longest cold snap we have had in a decade which means EVERYONE has been using more energy than usual. This should be a nice little boost to their profits in the next quarter i’m thinking? Also to mention all 4 of these companies have taken a slight pull back over the last week that I feel could be taken advantage of. Those are 3 good reasons to invest(cold weather, extra usage and a small pull back). Anything else to peak your interest? How about rising electricity and gas prices? As a “home owner” and a person who lives in Canada inflation has been very noticeable as of late which means your bigger bills could result in bigger gains on your investment.
Here is a little breakdown of each company and some metrics to show you why they are good investments.
Hydro One LTD is the biggest utility distribution and electricity transmission company in Ontario, Canada. They supply 1.4 million rural Ontarians with electricity which makes up 26% of all customers. In 2020 they had $30.3 Billion in assets and had $1.5 Billion in net earnings. Hydro One has 10 projects on the go right now with 4 development projects and 6 sustainment project, 3 of those project should be completed in 2021.
Hydro One LTD(H)
$31.99 CAD/share
$19.1 Billion Market Cap
2.95 Earnings Per Share
19.8 P/E(forward)
Dividend Yield of 3.3%
Payout Ratio of 65%
ATCO LTD is a world wide utilities, structure & logistics, energy infrastructure, retail energy, transportation and commercial real estate company that has worked in over 100 different countries. They currently have over 75,000 KMS in electrical powerlines and over 64,000 KMS in Natural gas pipelines. Atco LTD currently has over $22 Billion in total assets and they have increased their common share dividends 28 years in a row.
ATCO LTD(ACO.X non-voting shares)
$41.01 CAD/share
$4.7 Billion Market Cap
2.20 Earnings Per Share
12.5 P/E(forward)
Dividend Yield of 4.4%
Payout Ratio of 94%
Fortis Inc is an international diversified utility and electric holding company that currently operates in the Caribbean, United States and Canada. They have over 3.4 million utility customers and have over $56 billion in assets. Fortis inc has had over 47 years of consecutive dividend increases and in 2020 had a net earnings of $1.39 Billion.
Fortis Inc(FTS)
$58.84 CAD/share
$27.8 Billion Market Cap
2.60 Earnings Per Share
21.9 P/E(forward)
Dividend Yield of 3.6%
Payout Ratio of 75%
Emera Inc is a Electric and gas utilities company that operates in North America and the Caribbean. They currently have $31 billion in assets and serve over 2.5 million customers in 6 different countries. Emera has paid a dividend since 1992 and it has grown every year since paying it and in 2020 they had a net earnings of $984 Million.
Emera Inc(EMA)
$60.96 CAD/share
$14.9 Billion Market Cap
3.78 Earnings Per Share
21.5 P/E(forward)
Dividend Yield of 4.3%
Payout Ratio of 82%
These 4 companies are all very safe and stable investments. They all provide a good and safe dividend along with slow and steady growth. You will not get rich overnight with these stocks but any of them would be a good addition to you portfolio. I have them on my watchlist and am keeping an eye on them especially with the cold weather here along with the price of everything going up. It is hard not to make money on the money you already spend.
That is all for today and remember everyone, invest in yourself first.
*Disclaimer-I do not currently hold any of these companies in my portfolio.
Outsider Trading 