The article was written by a Fortis shareholder and the theoretical 8% dividend hike was put forward by an analyst with a buy recommendation on the stock. I'm not sold. That would put the dividend at 32.5 cents next year (4% yield at current price) which would be okay, but I am betting on it ending up at 31 cents.
I tend to worry about this stock more than any other I own despite it being a low beta utility. The share price just hasn't responded well enough to the current low interest rate environment as opposed to a market-darling like Enbridge. When interest rates rise and their cost of debt goes up, the opportunity cost of owning this compared to fixed income also goes up. Can't bode well for the stock. I'm a seller at $33+.
I don't get it argo.You and humble both promote the "handy 5-pack" ie a core-pipeline,tele co,bank,utility,rails but ive seen you want to sell out a few cores.Fortis is a income stock and most "hold" for that-a couch potatoe stock.What happenend to build a machine?why disrupt your army that is giving you soilders?Is'nt that short sighted thinking?(i mean no disrespect but i don't get it- and i vaule the why behind the why)
Fortis is the only one of my 5-pack that I've expressed concern about, and it's easily the 5th best in the pack. Something like Telus has it beat on all metrics, but out of devotion to my equal weight diversification I don't go overweight on a telecom at the expense of a utility.
CN Rail is down almost twice as much as Fortis this year but I would never be concerned about it or sell. The dividend increases on CNR are exceptional, and it has that catalyst whenever the economy gets roaring to send the stock to new highs. Fortis has question marks and catalysts to drive it lower, which is part of my concern.
Keep in mind this is very selective worrying, as I believe the vast majority of stocks out there aren't worth consideration for a purchase. I'm not fretting about RIMM because I would never buy it in the first place.
donald i haven't really been promoting a 5-pack stock combo but rather i've been trying to turn the spotlight onto argo & his mini-portfolio. Because i believe in his concept, i think it's an efficient, simple, money-making concept for countless small investors, & argo has always written about it clearly & convincingly.
the idea is to eliminate all the losers in an index & concentrate instead on a tiny but diversified group of large cap out-performers.
investors can hold other stocks, of course, but these 5 (sometimes 6) picks could go in a tfsa or serve as the bedrock core of a non-registered portfolio.
argo has spoken to this concept many times here in cmf forum, over a period of about 2 years. I don't track his 5-pack myself, but i'm sure it has outperformed XIU or XIC, for example, over the past 24 months.
one has to keep in mind that there are zero management fees for the 5-pack. The broker will do all the accounting & render one tax slip at the end of the year. There will be no irritating special dividends, returns of capital or unwanted taxable capital gains as can happen with etfs. Instead, there will be eligible dividends pure & simple, plus the investor gets to control when & how he will take his capital gains.
lastly, markets change all the time. From time to time even a 5-star 5-pack has to undergo change. Rather than doubt argo's sense that now is the time to slip out of fortis, one could be happy that he continually monitors his little fund, & even happier that he posts up a management report from time to time so as to keep everybody current.
I'm not doubting argo.I'm just curious on the "rotation" process of the 5 pack concept.If you look @ fts from a long-term range it is clearly a grand daddy as far as income stocks go(i realize past doesn't equal future)There is good-better & best and it's fair to say fts is "best in class" esp against other utility names.When exiting a core does one exit and look @ just the sector?(is it fts against itself,against the entire market or against the utility sector when evaluating?)never abandoning a sector?(ie like holding a insurance co right-now)When self dripping a "5-pack" are "we" looking @ weighting more than anything?ie level allocation is the system(no chasing)The 5 pack is more about income stream than anything else?I don't think people look to fortis for anything else than a bedrock.....I'm more curious of the system.
If you want to put dividend paying stocks in TFSA you can also use UK, Argentina and South African stocks as ADRs from these countries should avoid withholding taxes in your TFSA.
Originally Posted by Argonaut
Some companies you could consider are YPF, TEO, Sassol, RDS.B, BBL, GSK, BP, lots of Argentina banks, HBC, etc.
Trading halted after a $1.3b offering of shares available now at your broker. Be careful, remember ENB had the same offering a few weeks ago and the share price fell about 5%. CIBC had the IPO for a few weeks $1+ over the market price .
Edit: Checked again and the offering was dated May 10th, so this has already been priced in ??
Last edited by webber22; 2012-06-19 at 03:59 PM.
Fortis Inc. (TSX:FTS) has signed a deal to raise at least $601 million in an equity offering to help pay for its deal to buy New York state utility CH Energy Group.
The Canadian utility company said Tuesday it has an agreement with a syndicate of underwriters to sell 18.5 subscription receipts for a purchase price of $32.50 per receipt, which will entitle the holder to one Fortis share.
So, what should we expect tomorrow?
Hm. I've never experienced this sort of thing before.
FTS sells to underwriters for $32.50, right? So... the share price shouldn't fall necessarily.
Stock prices can be punished whenever new shares are issued due to perceived share dilution. But there are good stock dilutions and bad ones. If it is determined by the market tomorrow morning to be a bad one, then the stock could fall below 32.50 and those that are signing up would be buying at a higher price. We need someone with time on their hands (maybe Belguy) to dig deeper into the numbers
Edit: Checked and found that back in May S&P boosted the outlook for Fortis’s rating from ‘credit watch’ to stable on the assumption that the company will raise at least $600-million in common shares. So that is what has happened, so the price should not be affected tomorrow
Last edited by webber22; 2012-06-19 at 06:45 PM.