# Canadian Utilities (CU.TO)



## GOB

I'm considering taking my significant gains in FTS and moving into CU. FTS has had a great run and at this point has a pretty high multiple. Dividend increases while rock solid are pretty much a formality with only a penny annual increase for the last few years. Payout ratio is fairly high. 

CU has a better valuation, low payout ratio, strong dividend growth and has been increasing dividends for decades. They're spending a lot of money on infrastructure expansion, which should a positive for earnings long term. I think it's a better play right now, and I'd get back into FTS if it drops back to the low or mid-$30s. 

Only downside for me is CU has a lower current yield - 2.65% vs 3.25% for FTS. But I expect more capital and dividend growth to make up for it in relatively short order.

Thoughts?


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## Killer Z

GOB said:


> I'm considering taking my significant gains in FTS and moving into CU. FTS has had a great run and at this point has a pretty high multiple. Dividend increases while rock solid are pretty much a formality with only a penny annual increase for the last few years. Payout ratio is fairly high.
> 
> CU has a better valuation, low payout ratio, strong dividend growth and has been increasing dividends for decades. They're spending a lot of money on infrastructure expansion, which should a positive for earnings long term. I think it's a better play right now, and I'd get back into FTS if it drops back to the low or mid-$30s.
> 
> Only downside for me is CU has a lower current yield - 2.65% vs 3.25% for FTS. But I expect more capital and dividend growth to make up for it in relatively short order.
> 
> Thoughts?


FTS is a core holding for me, thus I plan to only take profits on it from time to time should it become over-weighted in my portfolio. CU is another good long term play, however I do not see FTS or CU as stocks that should be traded in and out of .........especially for other stocks within the same sector. 

Trying to guess the tops and bottoms of a particular stock is difficult enough as is (if not impossible), trying to do so amongst two stocks within the same sector leaves very little room for error.


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## My Own Advisor

Both core holdings, not intending on selling either, only buying when I feel the price is right. Price seems better for CU vs. FTS right now. Good stocks to DRIP!


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## 1980z28

I have appox 2.5k shares of fts ofsets oil

oil is not on my buy list,so sad


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## fatcat

i own equal shares of both of them and emera as long term holds
thomson reuters stock reports rates emera a 10, fts an 8 and cu a 5
but these numbers bounce around constantly
both fts and cu are dividend aristocrats


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## gibor365

In utility space I hold FTS, EMA and SO:NYSE ... always wanted to buy CU and always it was a bit expensive and yield never got 3%+ ... in last 3 weeks CU was up almost 10% ... I'd wait for a bit lower price... and wouldn't sell FTS too... on the other hand CU gonna increase next dividend and usually day increase by 10%, so yield will come close to 3%


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## gibor365

fatcat said:


> both fts and cu are dividend aristocrats


I think they are ONLY real aristocrats (by S&P definition)


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## My Own Advisor

Agreed gibor!


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## bmoney

I know what you mean, I just finished selling FTS and EMA today so that probably means another 20% up from here. But these stocks went parabolic in the last 4 weeks, up about 12-15% plus a dividend thrown in. I like these stocks for the long haul but theres nothing wrong with harvesting some gains if you feel the stocks are overvalued. OECD is recommending the BoC raise rates in Feb, we'll see how these stocks fare if there's a rate hike, last time it was the 'taper tantrum' and they were down a good 10%-20%


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## Greyhound86

I may be too early but I am considering selling our FTS, EMA and ENF shares. I have some fairly large gains in them and would hate to see those gains disappear when/if interest rates rise. 

Never owned CU and it is a quality company but like the others the div yield is pretty low considering the interest rate risk that might or might not be coming.


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## gibor365

Greyhound86 said:


> I may be too early but I am considering selling our FTS, EMA and ENF shares. I have some fairly large gains in them and would hate to see those gains disappear when/if interest rates rise.
> 
> Never owned CU and it is a quality company but like the others the div yield is pretty low considering the interest rate risk that might or might not be coming.


I don't know when interest rates going up...and if they do, all 3 discussed utilities will continue to pay and increase dividends avery year and possibly by higher %... the same with high quality REITs....
and if you sell all utilities, REITs, telecos because of possible interest rates going up......what you gonna buy? ATL5000?


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## GOB

I made the switch today. Bought FTS for its stability and dividend strength. Wasn't expecting a 27% increase so quickly so I'll take it and run, and switch to an equally strong and stable utility with better valuation and dividend growth. I'll happily buy FTS back if it ever comes down 15-20%.


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## Butters

I still like fortis. It's only about 5% overvalued. But has more growth in 2015
All depends on their US deal

I think CU and atco will be good towards the end of 2015
Their numbers were like 3% eps in 2015
12% in 2016

It might be a good buy now as utilities never give u good opportunities but they might not move for the next half year, I think one could wait a bit

Maybe what I'm saying is if CU is the same price in 6 months it's a strong buy


I own 2.6k in fortis
1.1k in atco


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## gibor365

SheaButters said:


> I own 2.6k in fortis
> 1.1k in atco


2,600 shares of FTS ?!


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## bmoney

If you have 2+ years and want to take a bit of risk NPI looks poised to grow. They are looking to almost triple capacity through significant investments in renewables in Europe, NA and South America. Their payout ratio is over 100% but their 6% dividend looks sustainable. They will likely do a capital raise in Feb, so it might be a good time to buy and hold early next year, again if you want a utility with growth and can stomach some risk.


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## My Own Advisor

NPI is looking good long-term, happy to DRIP CU and intend to do so for decades to come.


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## HaroldCrump

bmoney said:


> Their payout ratio is over 100% but their 6% dividend looks sustainable.


Don't make that assumption.
There are serious concerns about the sustainability of their dividend.
The European sustainable energy investments are not expected to be net cash flow before 2017 - '18.
In the meantime, if bond yields go up, it will hurt them badly.

Given these low bond yields for the last 6 years, there is no excuse for them to have over 100% payout ratio.


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## Butters

Nah just $$$$ I'm small time!
But fts up 3% today now 8% overvalue. Cu and atco down. But they are also overvalued priced to 2015 prices. 

I'm guessing CU will be the same price in 6 months. Then it will have a good climb piror to 2016.

Now is an OK buy, 6 months should be a similar buy price. 

Definitely a good core holding in the 3 top TSX dividend increasers. Fts cu atco


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## My Own Advisor

CU is bond-like income, as is FTS.


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## bmoney

Not to derail the thread, but NPI have made stunning acquisitions/investments that will add significantly to cash flow in a few years, so there is a good and obvious reason why their payout ratio is north of 100%; it's actually under 100% as their DRIP is well subscribed. If there strategy pans out, this could be a rewarding utility stock to own for patient investors, of course, not without it's risks.

Full disclosure, I own a small position of 200 shares in NPI and I'm willing to take a risk because my time horizon is 1-30 years.


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## 1980z28

1980z28 said:


> I have appox 2.5k shares of fts ofsets oil
> 
> oil is not on my buy list,so sad


I believe it is time to sell maybe 1k shares as fts is now to much in my group of equities and purchase a couple etf`s ,will give it some thinking over the week.


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## gibor365

Not too encouraging Q report from CU
http://www.marketwired.com/press-re...015-first-quarter-earnings-tsx-cu-2014462.htm


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## GOB

I'll take the 10% divvy increase


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## AltaRed

gibor said:


> Not too encouraging Q report from CU
> http://www.marketwired.com/press-re...015-first-quarter-earnings-tsx-cu-2014462.htm


Other than the one time earnings adjustment due to AUC decisions, this is in line with what shareholders (including me) expected. Power prices HAVE to come down in AB in reduced demand as well as earings from commodity associated businesses. More of this to come as others report.


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## gibor365

My limit buy when yiled is 3% ( about 39.33)... will see if it goes to this level...


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## doctrine

Even with reduced net earnings due to a one time AUC, adjusted earnings were up. I think that's fantastic for a utility at this low valuation. The only buy in the sector, IMO, right now at $40 or under.


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## KaeJS

Not a bad earnings report if you ask me.

I just have put options on it. Not a long term holder...


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## KaeJS

This got a little bit smacked today. Somewhat disappointing.


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## My Own Advisor

Bad news is great news for buyers.


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## Jon_Snow

Now on my "to buy" radar.


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## supperfly17

I remember going through the Transalta thread and reading comments like these when it was trading in the 20s. I know its not the same stock and same valuation, but nevertheless I find it funny how we all think and our minds work. 

Back to topic, I am also looking at this one, but probably will not purchase any shares unless there is another 10-15% correction within this sector.


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## migperreault

A good drop since the last dividend, but I still hesitate between CU and AQN...


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## blin10

ex divi may 5, good chance it'll be lower on mon/tue, might pick it up for a couple months trade


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## KaeJS

The options are looking so good on this one. I wish I had some spare capital.


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## bmoney

supperfly17 said:


> I remember going through the Transalta thread and reading comments like these when it was trading in the 20s. I know its not the same stock and same valuation, but nevertheless I find it funny how we all think and our minds work.
> 
> Back to topic, I am also looking at this one, but probably will not purchase any shares unless there is another 10-15% correction within this sector.


Agree as-well. I've been looking at FTS, utilities are correcting as the market anticipates a rate hike - recall the taper tantrum, too early to load up here.


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## doctrine

supperfly17 said:


> I remember going through the Transalta thread and reading comments like these when it was trading in the 20s. I know its not the same stock and same valuation, but nevertheless I find it funny how we all think and our minds work.
> 
> Back to topic, I am also looking at this one, but probably will not purchase any shares unless there is another 10-15% correction within this sector.


As a prior Transalta owner who bought and sold in the $20s, I can tell you Canadian Utilities is nothing like them. Let's start off with some basics. Transalta had a 100%+ dividend payout ratio and no dividend increase for a decade or more, which meant they were barely hanging on and were actually paying 40% of the dividend out of book value for the last 3-4 years before the inevitable cut and subsequent destruction of the share price. CU's DPR is typically 30-40%, and even in the last quarter after a one-time $40M writedown was still under 50%. Let's also not forget the some 42+ year history of higher dividends. FTS, by comparison, has a yield that is only 0.5% higher but has a DPR of 80%+, vice 30-40%. The dramatically lower DPR results in more capital being retained and higher book value year after year, which is something that other utilities are having a hard time with paying out 70-90% of earnings. Which is more secure, and which company could handle higher interests rates better? This has irrational sell-off written all over it.


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## Synergy

bmoney said:


> Agree as-well. I've been looking at FTS, utilities are correcting as the market anticipates a rate hike - recall the taper tantrum, too early to load up here.


Agreed. We haven't even started taper tantrum number 2!


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## KaeJS

doctrine said:


> This has irrational sell-off written all over it.


100%.

Let's also keep in mind that CU is profitable. When was the last time TA was profitable?

In the last 4 Years, CU has a combined EPS of: 8.16
In the last 4 Years, TA has a combined EPS of: -0.24


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## OurBigFatWallet

This recent dip reminds me of when Fortis went below $30 about a year ago. I bought at $29.75 and was happy I did so


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## Butters

I'll jump on the buy bandwagon for sure...

even though CU has a 3% yield right now

dont forget about its sister ATCO, lower payout, but higher dividend growth

either one a great buy

might even sell my FTS to buy it!


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## GOB

KaeJS said:


> 100%.
> 
> Let's also keep in mind that CU is profitable. When was the last time TA was profitable?
> 
> In the last 4 Years, CU has a combined EPS of: 8.16
> In the last 4 Years, TA has a combined EPS of: -0.24


EPS comparisons between different companies are rather meaningless without presenting number of shares outstanding. Although when EPS is negative the conclusion is obvious.


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## Eder

I shuffled up to the trough for this one yesterday...sold 1/2 my Enbridge to pay for it...oink oink


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## KaeJS

GOB said:


> EPS comparisons between different companies are rather meaningless without presenting number of shares outstanding. Although when EPS is negative the conclusion is obvious.


That was my whole point. TA is still negative. Regardless of the share price, number of outstanding shares, or any other metric. The fact is that TA has not been profitable for quite some time. CU, on the other hand, has been posting profit yoy and they haven't cut their dividend.


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## blin10

got into this one


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## plasmasnake

Anybody DRIPing this? Looks like a pretty long history of dividend growth.


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## thepitchedlink

was thinking of this one too.....


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## OurBigFatWallet

Anyone know if the DRIP discount is still 2%?


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## Butters

yes still 2%... this list is updated monthly i believe


http://www.dripprimer.ca/canadiandriplist


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## scientist

SheaButters said:


> yes still 2%... this list is updated monthly i believe
> 
> 
> http://www.dripprimer.ca/canadiandriplist


On that list, can you tell me what the blue-highlighted companies denote?


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## My Own Advisor

Very long history of dividend growth and yes, 2% DRIP discount remain in effect!
http://www.canadianutilities.com/Investors/Stock-Information/Documents/DRIP_QA.pdf


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## Canuck

Alright I'm buying more!

This is about as safe as you can get right? besides maybe Fortis?

I keep thinking that I have to stop re-investing my dividends and just put the cash in a savings account, but I HATE the idea of making 1% fully taxed income. 

ugh...


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## AltaRed

Just bought some more to fill out the partial position I have held for some years. Just like a good book, it is now on the shelf to do its thing for years to come.


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## Canuck

doubled my position at 36.97... too hard to pass up


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## thepitchedlink

Yup, time to get in


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## bmoney

CU is oversold for the moment, I picked up 500 @ 36.90 and hoping for a bounce by Friday.


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## blin10

at 36.5 and 36 huge support level... if it chews through that somehow next one is at 35, 34.6 and 34


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## blin10

it can also go lower for sometime to surprise people (since everyone thinks it's way too low, usually it goes lower to shake out weak hands)


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## My Own Advisor

Happy to DRIP  The lower the price, the better!


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## supperfly17

No need to rush into this one.


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## bmoney

CU and many other fixed income stocks ares simply reacting to the US 10Yr treasury yield creeping up. Yellen did not sound very optimistic today, and where I disagree with Mr. Market is that oil price inflation which could show up in other areas of the price basket, will not sway the Fed to raise rates this summer. Personally I think it's a bit of a fake out, but I will not completely rule out the risk of taper tantrum II now or sometime in the near future, which is why I prefer to trade this than start a long position.


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## supperfly17

bmoney said:


> CU and many other fixed income stocks ares simply reacting to the US 10Yr treasury yield creeping up. Yellen did not sound very optimistic today, and where I disagree with Mr. Market is that oil price inflation which could show up in other areas of the price basket, will not sway the Fed to raise rates this summer. Personally I think it's a bit of a fake out, but I will not completely rule out the risk of taper tantrum II now or sometime in the near future, which is why I prefer to trade this than start a long position.


Good analysis. Nothing wrong with this one, but if one was to look at affordable value stocks on the TSX, currently this is one of the few that shows up.


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## My Own Advisor

Yup. When rates go up....some capital intensive stocks like this one will be punished and you'll get these stocks at lower prices. Keep up the good work Yellen!


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## bmoney

Nice little bounce today, hopefully we finish at the top of today's trading range to setup a two day rally. Treasury yields seem to be correlated with oil lately, so another fall in oil should trigger another drop in interest rates, I think. I will probably dump tomorrow if it hits my target of $37.90


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## peterk

Sure I'll jump on the CMF bandwagon here  In for 30 shares.


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## londoncalling

My bid is still waiting to be filled. I have time to wait till it hits my price. I have several bids across a couple of positions across several sectors. In the meantime, I will hurry up and wait.


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## KaeJS

I really don't see rates going up any time soon. I don't think that's what is affecting the stock price.
The stock price just happened to get smacked because the earnings didn't meet expectations and the overall market has been down.

The company is still well run and they turned a profit. Just a temporary dip.
If you look at the chart, it does dip occasionally, only to come back again...


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## leeder

CU and ATCO, based in Alberta, are affected by the low commodity price through the energy division.

I've added to my position as the price has fallen. Great entry point for long term investors of this.


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## KaeJS

leeder said:


> CU and ATCO, based in Alberta, are affected by the low commodity price through the energy division.


This is also very true.


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## bmoney

Watched this stock slowly melt away any gains throughout the entire day, dumped at a marginal profit. I can atleast buy dinner.


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## gibor365

bmoney said:


> Watched this stock slowly melt away any gains throughout the entire day,.


It's strange ....whenboth FTS and EMA significantly up ...


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## fstamand

gibor said:


> It's strange ....whenboth FTS and EMA significantly up ...


I didn't get that either. weird.


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## dogcom

Probably being Friday the fast traders took their gains and buyers didn't want to hold a position into the weekend.


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## gibor365

dogcom said:


> Probably being Friday the fast traders took their gains and buyers didn't want to hold a position into the weekend.


What gains?! It was down about 10% in past 10 days and rose 1% yesterday! And why not to held a position into the weekend, on 2nd longest dividend aristocrat / utility with good fundamentals?!


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## gardner

It's waiting for me to get the rest of the way in. I've been eyeing it for a while and only took a quite tentative position this week. I'll buy another chunk next week, I think, after which it will skyrocket freely.


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## thepitchedlink

gardner said:


> It's waiting for me to get the rest of the way in. I've been eyeing it for a while and only took a quite tentative position this week. I'll buy another chunk next week, I think, after which it will skyrocket freely.


Sweet!! Can I quote you on this when it doesn't go as planned!! I bought in a bit this week as well.....


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## gibor365

gardner said:


> It's waiting for me to get the rest of the way in. I've been eyeing it for a while and only took a quite tentative position this week. I'll buy another chunk next week, I think, after which it will skyrocket freely.


I have exactly same plan  , but unlike bmoney I'm buying for a long term


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## dogcom

Gibor my explanation may not jive but the weekend does cause different things to happen to a stock price on the extremely short term. Of course I am just speculating but that is what short term is speculation unless there is news to back it up and that may be.


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## blin10

gibor said:


> It's strange ....whenboth FTS and EMA significantly up ...


it's also crazy that FTS pays out $1.36 in divis with EPS is 1.36 (on Google finance), compare this to Cu which pays $1.18 in divis with EPS is 2.33 (on Google finance).


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## AltaRed

blin10 said:


> it's also crazy that FTS pays out $1.36 in divis with EPS is 1.36 (on Google finance), compare this to Cu which pays $1.18 in divis with EPS is 2.33 (on Google finance).


What are those same numbers on a comparison of Cash Flow/Share?


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## gibor365

Yes, it's crazy 

From CIBC IE 
CU
P/E 15.92, forward P/E 15.6 and P/CF 8.78

FTS
P/E 27.38 Forward P/E 19.5 and P/CF 9.52


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## bmoney

Gents, have you looked at the 10 year chart? This stock has climbed steadily in-line with monetary easing from QE to interest rate cuts since '09. It goes without saying but you are highly exposed to interest rate risk. For the current yield, I don't believe it is worth the risk even with their history of dividend growth. There are many other dividend paying stocks around a 3% yield that are less susceptible to interest rate risk although they may offer less consistent dividend growth. If you need the income, why not choose a REIT with a higher yield? If you are looking for capital preservation, there are safer options, and if you're looking for growth this is not the sector.

I don't believe we will see rate increases soon, but that persistent fear will weight heavily on this sector. I think we've seen the top. I guess my question is, what are you seeing in CU that I am not?


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## My Own Advisor

Interesting points.

I guess my comeback would be...this company thrived for decades before QE. Why is it different now?


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## doctrine

bmoney said:


> If you need the income, why not choose a REIT with a higher yield?


REITs won't react to interest rates in the exact same way as a utility? At least CU has a far lower payout than most REITs and can reinvest that in the business.


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## KaeJS

Are interest rates really a threat at this time? 

If people are selling due to interest rate risk (which I don't think they are) then they are all selling way too early. Interest rates won't change in 2015 (in my opinion, of course).


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## KaeJS

bmoney said:


> Gents, have you looked at the 10 year chart? This stock has climbed steadily in-line with monetary easing from QE to interest rate cuts since '09.


Lots of stocks have climbed steadily since QE was introduced... It's not CU specific.


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## scientist

Functionally, what is the difference between Canadian Utilities Limited (CU.TO) and Canadian Utilities Inc. (CIU-A), and when would an investor want to invest in one over the other?


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## AltaRed

scientist said:


> Functionally, what is the difference between Canadian Utilities Limited (CU.TO) and Canadian Utilities Inc. (CIU-A), and when would an investor want to invest in one over the other?


http://www.atco.com/About-Us/Corporate-Profile/Corporate-Structure Where do you feel lucky? CU holds a broader spectrum of companies, including all of CUI.


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## scientist

AltaRed said:


> http://www.atco.com/About-Us/Corporate-Profile/Corporate-Structure Where do you feel lucky? CU holds a broader spectrum of companies, including all of CUI.


I suppose I feel luckier with CU...CU is more diversified and right now it is a good position to buy in...


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## bmoney

IMO people are paying a premium to own this stock exactly because of the dividend growth and the storied history. For that you get a measly yield (another reason why people hold it), that is well covered exactly because it is measly. CU benefited from 2 primary phenomenon both long in the tooth, QE and the Western Commodity boom. Moving forward CU will have a challenge to out pace increases in the 5 & 10yr yields set by the bond market. That can happen only under emergency rates. If the US, Europe or China pickup some meaningful traction, rates will raise and the pressure is on. Your best hope is for things to stay as they are.

If you need the income (to live on) why not go with a higher yield now? MRG.UN pays 5.9% divi with an AFFO payout of 68%, debt of 56% of assets. If you're looking for slow steady growth with a dividend, there are lots of other ways to play this out. 

Buffet began his big bet on utility stocks back in 2007, almost precisely when US treasury yields began their decent (10 Yr US Treasury yield was 5% then).


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## blin10

bmoney said:


> CU is oversold for the moment, I picked up 500 @ 36.90 and hoping for a bounce by Friday.





bmoney said:


> IMO people are paying a premium to own this stock exactly because of the dividend growth and the storied history. For that you get a measly yield (another reason why people hold it), that is well covered exactly because it is measly. CU benefited from 2 primary phenomenon both long in the tooth, QE and the Western Commodity boom. Moving forward CU will have a challenge to out pace increases in the 5 & 10yr yields set by the bond market. That can happen only under emergency rates. If the US, Europe or China pickup some meaningful traction, rates will raise and the pressure is on. Your best hope is for things to stay as they are.
> 
> If you need the income (to live on) why not go with a higher yield now? MRG.UN pays 5.9% divi with an AFFO payout of 68%, debt of 56% of assets. If you're looking for slow steady growth with a dividend, there are lots of other ways to play this out.
> 
> Buffet began his big bet on utility stocks back in 2007, almost precisely when US treasury yields began their decent (10 Yr US Treasury yield was 5% then).


seems like you can't pick a side, in one post it's over sold in another it's... you can't load up 100% of your portfolio in REITS, you have to be diversified and there are few good solid companies in various sectors on TSX


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## KaeJS

I really don't see how you think CU is trading at a premium. It has a P/E of less than 16 and is currently at the lowest level it has been at since January of 2014.

I guarantee you that people aren't buying this company strictly for the yield. Not that CU and MRG.UN are in the same league, but the chart on MRG.UN is horrifying and so is the fact that their profitability is all over the place. 3 Quarters ago, MRG.UN wasn't profitable enough to cover the dividend they paid. In fact, for the first 6 months of 2014, the dividends paid by MRG.UN were equal to an amount of $0.30/share. Over this same period, the earnings per share was only $0.23. This is not the case for CU.

You think there are 2 reasons CU has benefited over the last 5+ years.

Well, I'll give you 3 reasons for why CU has been down 10% in the last 2 weeks:

1) They posted earnings. The earnings report wasn't bad, but I think a lot of folks saw it this way.

2) Alberta, NDP, Commodity Prices, etc...

3) Utilities as a whole have been down over the last month. Within the last 5 days, and within the last 1 month, TA.TO, ACO.X, CU.TO, FTS.TO, EMA.TO are all in the red. AQN.TO is negative over 5 days, but does have a 1%+ increase over the last 1 month period. Coincidentally, the TSX has also been down over the last 5 days and over the last 1 month, as well. Also keep in mind that a dividend was paid by CU.TO last week.

In theory (theory of KaeJS, that is) this should all blow over since all 3 of the above factors have virtually nothing to do with the company itself. The earnings were fair, the company is profitable. Alberta will survive the NDP madness and oil isn't going to stay low forever. Markets will come back as they always do and baby boomers will need utilities in their portfolio, just as everyone needs electricity in their home.

I would bet my life interest rates and yields are not the reason this stock has fallen in value.


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## bmoney

blin10 said:


> seems like you can't pick a side, in one post it's over sold in another it's... you can't load up 100% of your portfolio in REITS, you have to be diversified and there are few good solid companies in various sectors on TSX


CU is oversold on a technical basis and likely to find support around $36.45, setting up a trade to $37.90. I bought this only for a trade, caught the bounce up, watched it melt as I bailed (with a small profit). Continuing to watch from the sidelines. Should I get caught going in the wrong direction I like to know my prospects for recovery if a 1 week trade turns into a 1 year hold; the more I think long term about CU the more concerns I have.


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## blin10

bmoney said:


> I like to know my prospects for recovery if a 1 week trade turns into a 1 year hold; the more I think long term about CU the more concerns I have.


If you're a trader than that's the gamble as a trader you always take, it's super hard to predict prices on short term bases (I did trade before as well but it was a waist of time for me ). Whoever is buying CU are mostly buying for a longer term than weeks, I'm mentally prepared to hold this for years. I did the math, if I was just buying and holding rather than trading for all these previous years, I would literally have double the money in my account.


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## Afp

blin10 said:


> If you're a trader than that's the gamble as a trader you always take, it's super hard to predict prices on short term bases (I did trade before as well but it was a waist of time for me ). Whoever is buying CU are mostly buying for a longer term than weeks, I'm mentally prepared to hold this for years. I did the math, *if I was just buying and holding rather than trading for all these previous years, I would literally have double the money in my account*.


+1 well said. blin10, I believe you are a good stock picker from day one. I always pay attention to your picks, Toronto.Gal's, and hboy43's.

I have owned and DRIP CU for years. This one is the kind of stock that I would like to keep for life.


----------



## My Own Advisor

Yup, buy and hold and hold. If the price drops, just buy more.


----------



## leeder

blin10 said:


> If you're a trader than that's the gamble as a trader you always take, it's super hard to predict prices on short term bases (I did trade before as well but it was a waist of time for me ). Whoever is buying CU are mostly buying for a longer term than weeks, I'm mentally prepared to hold this for years. I did the math, if I was just buying and holding rather than trading for all these previous years, I would literally have double the money in my account.


Agreed. I've bought more of this recently. Not below $37, so I didn't nail the bottom, but I intend to add more if it keeps going down further. Not to mention, I have the DRIP going on this. I'm a happy camper


----------



## scientist

leeder said:


> Agreed. I've bought more of this recently. Not below $37, so I didn't nail the bottom, but I intend to add more if it keeps going down further. Not to mention, I have the DRIP going on this. I'm a happy camper


I'm opening a brokerage account just so I can buy this stock. Unfortunately, I am hoping it won't rally in the next week and stay where it is...the account is already open but I am pending the transfer from my savings TFSA to my broker TFSA


----------



## supperfly17

scientist said:


> I'm opening a brokerage account just so I can buy this stock. Unfortunately, I am hoping it won't rally in the next week and stay where it is...the account is already open but I am pending the transfer from my savings TFSA to my broker TFSA


Whats the rush? Just because everyone is buying, you have to as well? There will always be stocks on sale. Take your time. Learn more about utilities, about the company etc...


----------



## scientist

supperfly17 said:


> Whats the rush? Just because everyone is buying, you have to as well? There will always be stocks on sale. Take your time. Learn more about utilities, about the company etc...


It's not just based on this forum of course...I have read about the company and have my own reasons for buying this instead of other things like crescent point energy, COS, enbridge or FTS at this moment


----------



## Vicjai

agreed.


----------



## plasmasnake

scientist said:


> I'm opening a brokerage account just so I can buy this stock. Unfortunately, I am hoping it won't rally in the next week and stay where it is...the account is already open but I am pending the transfer from my savings TFSA to my broker TFSA


Be very, very careful with how you do this. Maybe you already know this, but from the way you explained it ("account is already open" and "transfer from my savings TFSA to my broker TFSA") it sounds like you might not. This is difficult to explain, so I will try to give you an example:

If you withdraw $20K from one TFSA, and then deposit $20K into your other TFSA, you will have exceeded your maximum yearly $10K contribution, and will be fined 1% per month on the overcontribution.

What you can do is withdraw $20K from one TFSA, and then WAIT until next year, so that $20k will be added on to your regular annual contribution limit, which will then be $20K + $10K = $30K.

Another thing you can do is transfer a TFSA completely as-is from one institution to another. I don't believe you can do a partial transfer though.

Sorry for the off-topic, but just wanted to make sure our friend here doesn't get burned...


----------



## scientist

plasmasnake said:


> Be very, very careful with how you do this. Maybe you already know this, but from the way you explained it ("account is already open" and "transfer from my savings TFSA to my broker TFSA") it sounds like you might not. This is difficult to explain, so I will try to give you an example:
> 
> If you withdraw $20K from one TFSA, and then deposit $20K into your other TFSA, you will have exceeded your maximum yearly $10K contribution, and will be fined 1% per month on the overcontribution.
> 
> What you can do is withdraw $20K from one TFSA, and then WAIT until next year, so that $20k will be added on to your regular annual contribution limit, which will then be $20K + $10K = $30K.
> 
> Another thing you can do is transfer a TFSA completely as-is from one institution to another. I don't believe you can do a partial transfer though.
> 
> Sorry for the off-topic, but just wanted to make sure our friend here doesn't get burned...


Thanks for the concern! I've got that problem covered, although I appreciate people looking out for me because I am still new relative to everyone else... What I ended up doing is filling out a direct transfer form to avoid that problem...Because the TFSA savings and broker is within the same institution, I don't have to pay the institution transfer fee, but am pretty much following the same process.

That being said, because it can't be done by myself online, it is slooowwwww and I am watching CU rallying this morning but then stabilizing right now.... If only it would drop down a few more cents right now or before I buy


----------



## thompsg4416

I have a stock I'm looking to cash out of (TRQ) and looking to dump a big chunk into CU. Also hoping it drops a bit further before I buy


----------



## AltaRed

Folks, 

Cents, dimes, even a few percentage points or so makes no difference in the longer run. Don't get obsessed about small percentage changes. A year from now you will wonder what you were fussing about.


----------



## gibor365

AltaRed said:


> Folks,
> 
> Cents, dimes, even a few percentage points or so makes no difference in the longer run. Don't get obsessed about small percentage changes. A year from now you will wonder what you were fussing about.


I know  but this is psycological thing .... Bought 1st CU trenche too early, so now I'm more cautious


----------



## supperfly17

AltaRed said:


> Folks,
> 
> Cents, dimes, even a few percentage points or so makes no difference in the longer run. Don't get obsessed about small percentage changes. A year from now you will wonder what you were fussing about.



Yes if you are a long term investor it doesnt matter if its at 35, 36 or 37$ per share. so much fuss about nothing.


----------



## scientist

gibor said:


> I know  but this is psycological thing .... Bought 1st CU trenche too early, so now I'm more cautious


Exactly! There could be a second dip coming...or not...I would have bought already if I could and looked away...but in the mean time...I will thank my slow account for CU tanks or curse my slow account for CU hikes


----------



## londoncalling

I set my bid price weeks ago. If I miss it by a few pennies so be it. I have a lot of bids out there and many may never get exercised. I tend not to look back on missed buys but I seem to pay attention after a bid is executed. Just a flaw with my investor psychology. I do realize a few pennies, nickels or dimes make little difference long term but it is the only way I can stop myself from chasing rising prices.

Cheers


----------



## My Own Advisor

Totally agree AR. I recall freaking out about buying my first dividend stock about 7 years ago, ENB. I was sweating about the price, paying too much, the market was in the toilet, etc. Now I don't care and happily DRIP it every quarter.


----------



## KaeJS

I'm not worried about the stock - but I am confused as to the way the stock is performing currently.

They posted earnings which were not fantastic, but they were not bad. The company still pulled in $0.61 per share for the last quarter. Dividend payment is $0.29 for the same quarter. They have a surplus after paying the dividend. Sure, this last quarter was less profitable than the same quarter a year ago, but year over year the company continues to grow. From what I see, in 2013 the EPS was $2.09. In 2014, the EPS was $2.08. Given the tough time that the energy sector (and Alberta) has had in the last half of 2014, I hardly think this is anything to be concerned about.

If the stock is still paying dividends and still has a surplus, then how has this stock tumbled 10% in the last 1 month and not even had a slight recovery (yet)?

For the last 3 months, the stock is down over 11.5%.

I understand that there is more "risk" now due to the above mentioned items and that maybe CU was a bit "overpriced". I did however expect that this would probably jump to $38 again relatively quickly. It seems to be sitting around doing nothing. The stock has literally gone nowhere in 2 weeks.

Usually when this happens, the stock either breaks to the upside or falls to the next support level. I don't think falling further is an option...

Somebody please tell me what I am missing... and please don't say "interest rate risk" - Because we all know rates are not going up any time soon.


----------



## zylon

It could be as simple as seasonality.










http://stockcharts.com/freecharts/seasonality.php?symbol=CU.TO


----------



## KaeJS

Thank you for that chart zylon.

If that chart holds true, then I should have a 75% chance of CU going up next month. :biggrin:


----------



## KaeJS

Just read this... thought I would share:

_Canadian Utilities Limited

Canadian Utilities, also based in Alberta, has a dividend yield of more than 3% and has raised its distribution 43 times since its first cash payment in 1972. In April the utility announced first quarter 2015 adjusted earnings of $130 million compared with $186 million in 2014. The main driver of the decrease was a one-time earnings adjustment for the years 2013 and 2014 resulting from regulatory decisions. Earnings were also impacted by unfavourable market conditions in the company’s energy businesses. The stock has lost 10% in the past three months._


----------



## gibor365

My limit buy price 36.52 got triggered , so bought 2nd trenche


----------



## KaeJS

That was an interesting end of day close...
There was about 15k shares bought up right at 3:59:59pm. Final close: $36.80.


----------



## londoncalling

Zylon always provides the answer with a nice chart. much appreciated. I am hoping for the slide to continue into June so I can start a position. If not I will wait till it hits or else allocate the money elsewhere. I am fine with letting it run back up to where it was if hat is what the market decides. But I concur that it was an interesting day for CU.


----------



## fstamand

KaeJS said:


> That was an interesting end of day close...
> There was about 15k shares bought up right at 3:59:59pm. Final close: $36.80.


Someone had a loose half-mil (and change) ? Interesting indeed


----------



## bmoney

CU keeps knocking on $36.50 while putting in lower highs the past 5 trading days, it's poised to go lower.


----------



## Jon_Snow

No hurry to get in on this. It's been something I have wanted to own for a while so this recent swoon is timely for me. Hope it flounders some more.


----------



## bmoney

That was fast, new intraday low $36.34


----------



## bmoney

I would consider buying around the Nov 2014 low around $36.15 for a trade. I wouldn't be surprised to see CU in the $33.xx range which puts the yield around 3.5%


----------



## scientist

scientist said:


> Because the TFSA savings and broker is within the same institution, I don't have to pay the institution transfer fee, but am pretty much following the same process.
> 
> That being said, because it can't be done by myself online, it is slooowwwww and I am watching CU rallying this morning but then stabilizing right now.... If only it would drop down a few more cents right now or before I buy


^THAT being said, I am currently very glad my financial institution is taking its sweet time...


----------



## KaeJS

bmoney said:


> I would consider buying around the Nov 2014 low around $36.15 for a trade. I wouldn't be surprised to see CU in the $33.xx range which puts the yield around 3.5%


$33? On what basis?

This is already oversold.


----------



## blin10

KaeJS said:


> $33? On what basis?
> 
> This is already oversold.


anything can happen, but the odds are against it that's for sure


----------



## KaeJS

blin10 said:


> anything can happen, but the odds are against it that's for sure


Can you elaborate on why you think the odds are against it?

The stock is down 12% in 3 months. The company is profitable. The company is stable. The company has been around forever. The company has increased dividends for 40+ years consecutively. The price of oil has stabilized and is no longer falling through the floor. Interest rates are not increasing. The P/E is 15. The company is in line with it's peers and is not lagging.

It looks to me like it is oversold.


----------



## Jon_Snow

KaeJS said:


> $33? On what basis?
> 
> This is already oversold.


I find this statement interesting. You state that as though it is a fact. Even the so-called BNN/CNBC talking heads don't know what's going to happen next. Who predicted the oil price crash?

Let's face it, this is pretty much all guess work. CU is gonna do what it's gonna do. 

Of course some of us would love like to snag a portion at an attractive price if we can.


----------



## gibor365

> Can you elaborate on why you think the odds are against it?


 I think he meant that the odds against going to $33


----------



## KaeJS

Jon_Snow said:


> I find this statement interesting. You state that as though it is a fact. Even the so-called BNN/CNBC talking heads don't know what's going to happen next. Who predicted the oil price crash?


It's as close to factual as you are going to get in the market. Look at the 1 year and the 5 year chart. $36 is oversold. Check an RSI, it will say Oversold (and I haven't even checked RSI, because I don't use it).

The oil crash was different. Oil is something that is used globally and is affected by 497 million things. Supply/Demand, currency, weather, politics, etc.

CU is dependent on only a few things which makes it more predictable.



gibor said:


> I think he meant that the odds against going to $33


Maybe you are right. I didn't read it that way the first time around.


----------



## KaeJS

*This article was posted 45 minutes ago...*

http://www.forbes.com/sites/dividendchannel/2015/05/26/canadian-utilities-limited-becomes-oversold-cu/

Apparently I'm not the only one...


----------



## bmoney

KaeJS said:


> http://www.forbes.com/sites/dividendchannel/2015/05/26/canadian-utilities-limited-becomes-oversold-cu/
> 
> Apparently I'm not the only one...


Sorry to break it to you, but that Forbes article is written by an algo.

http://www.theguardian.com/media/shortcuts/2014/mar/16/could-robots-be-journalist-of-future

Forbes.com already uses an artificial intelligence platform provided by the technology company Narrative Science to generate automated news from live data sets and content harvested from previous articles. What makes it possible is that business news content tends to be formulaic and data-heavy, listing places, stocks and company names. The LA Times, meanwhile, uses robots to report on earthquakes: the organisation relies on an algorithm that pulls in data on magnitude, place and time from a US Geological Survey site.


----------



## KaeJS

^ Even if this is true, you still have not explained to me how you think $33 is a possibility.


----------



## zylon

*This is NOT a prediction. disclosure: I own CU shares.*

Here's a technical case for ~32.50
29.00 isn't out of the question.


----------



## bmoney

The market is discounting the chance of a rate hike in June - you can see the 10yr treasury reacting to expectations. As I mentioned earlier, I believe it is a fake out, and bullish for interest rate sensative stocks which is why I would trade CU. By the same token, the market is discounting the medium term risk of a rate increase. There seems to be a general consensus for an increase and why the sector has been beaten up; also why I do not want to go long here. Unless interest rate risk subsides, there is going to be pressure on CU, in addition to what's going on in Alberta. 

A simple test to understand the correlation is to plot the dividend yield of a stock to the Bank of Canada 5 and 10 year bond rate. You can export the rates in CSV from the BoC website.


----------



## KaeJS

Thank you for your explanation.


----------



## bmoney

There are many ways to read the tea leaves and I am not an expert at TA. I get my $33 support level from a breakout in 2012 (tested twice before the breakout and rally). $33 appeared to be interim support and then resistence in 2013. That level held in June, Sept and Dec 2013 then setting out new highs. 

The chart can be explained by the taper tantrum that began in June 2013 and ended roughly in Dec 2013 / Jan 2014. Oil prices had rallied back to over $100 in 2014, these factors gave CU a lift to new highs.


----------



## blin10

gibor said:


> I think he meant that the odds against going to $33


yap that's what i meant


----------



## blin10

zylon said:


> Here's a technical case for ~32.50
> 29.00 isn't out of the question.


you forget one huge thing: this a dividend blue chip and TA with it is not the same as with ie.facebook... in 2012 they were paying $.22 cents quarterly and now it's $0.295, if it goes back to 2012 price level it'll be a huge discount (unless something is wrong with the company)...


----------



## zylon

blin10 said:


> you forget one huge thing: this a dividend blue chip and TA with it is not the same as with ie.facebook... in 2012 they were paying $.22 cents quarterly and now it's $0.295, if it goes back to 2012 price level it'll be a huge discount (unless something is wrong with the company)...


I hope you're right!


----------



## scientist

zylon said:


> Here's a technical case for ~32.50
> 29.00 isn't out of the question.


Not here to argue whether Fib retracement works or not, but just 2 questions about those numbers:

1. Is it not supposed to start from 100% at the high, then the next level is 61.8%?

2. I am trying to reproduce a quick Fib trace for CU: I cannot find where CU hit 14-15$ in 2009 - google finance only shows a low of around 17-18$ Where did you find 14?


----------



## zylon

scientist said:


> Not here to argue whether Fib retracement works or not, but just 2 questions about those numbers:
> 
> 1. Is it not supposed to start from 100% at the high, then the next level is 61.8%?
> 
> 2. I am trying to reproduce a quick Fib trace for CU: I cannot find where CU hit 14-15$ in 2009 - google finance only shows a low of around 17-18$ Where did you find 14?


1. A 100% retracement would take it back to the start ~14.16
---A 38.2% retracement of the move up is ~32.37

2. Those numbers are from StockCharts.com

If you were measuring the percentage up, of a big move down, then you would put the 100% at the top.


----------



## scientist

thanks zylon


----------



## bmoney

Here's another interesting data point to consider.

Bank of Canada 10yr bond rates have been in decline for the better part of 7 years, and hit an all time low of 1.24% on Feb 2, 2015 just 2 weeks after CU hit an all time high of $44.04 on Jan 19. CU dividend yield on Jan 19 = 2.68%

BoC 10yr yield has rallied 54 basis points since Feb 2, adjusting CU dividend yield for rate increase should yield 3.22%

CU dividend yield as of the close today = 3.22% 

Coincidence?


----------



## AltaRed

bmoney said:


> Coincidence?


Almost certainly coincidence but a reflection of how capital intensive stocks are sensitive to increasing interest rates (lower earnings).


----------



## londoncalling

Another interesting day for CU.TO I put some skin in the game today at 36.25. Seemed to have scratched an itch to buy something. Am content to hold this one until they cease to increase dividends. cheers Would definitely double down at $29.00 :biggrin:


----------



## zylon

Lest anyone think that I'm expecting another 20% drop immediately for CU – this not be the case.

I try to look at both sides of the coin simultaneously, which is deucedly difficult to achieve. If CU does indeed fall that far, I expect it would take months to play out.

I have no exit strategy except to sell covered call options, should I catch a reasonable bid. If my shares are called away giving me some modest gain, that's fine – and I'll start over again.

Here then, is the best I can come up with, from a technical view, for an immediate move higher.


----------



## londoncalling

Thanks again for another lovely chart. I didn't mean to imply you expect CU to hit $29 soon or even at all. Instead I took your post to mean it was a possible scenario based on TA. My comment was that I would be glad to get it at $29. Those that purchased in April of 2013 may not feel the same way. I do not expect an immediate 20% drop either for CU. If it does occur I am sure there will be more than just CU on sale. Full disclosure I have another bid in around $32. I tend to put bids in place for a month or more than re evaluate based on what happens. With a horizon of 20-25 years, I feel fine with buying this way. I buy in tranches so if I bought today and it went down to $34 before the end of the day. My next bid may have been at $31 or $30 instead of $32. This is all just a hypothetical example. I don't place more than 1 bid for the same stock at a time.

Cheers


----------



## scientist

zylon said:


> Lest anyone think that I'm expecting another 20% drop immediately for CU – this not be the case.
> 
> I try to look at both sides of the coin simultaneously, which is deucedly difficult to achieve. If CU does indeed fall that far, I expect it would take months to play out.
> 
> I have no exit strategy except to sell covered call options, should I catch a reasonable bid. If my shares are called away giving me some modest gain, that's fine – and I'll start over again.
> 
> Here then, is the best I can come up with, from a technical view, for an immediate move higher.


I understand the MACD analysis, and how it may suggest a shift in price direction. Can you elaborate for me who doesn't understand, the relevance of the 8% of CU stock held in ZUT?
thanks
scientist


----------



## zylon

*@ londoncalling:*

It's all good! Just thought I would try to add some clarity in the unlikely event that someone might be following me.

Highly doubtful that I will be adding more CU myself, as I have enough. As you correctly point out, if CU drops, there will also be other bargains aplenty.


----------



## zylon

scientist said:


> I understand the MACD analysis, and how it may suggest a shift in price direction. Can you elaborate for me who doesn't understand, the relevance of the 8% of CU stock held in ZUT?
> thanks
> scientist


ZUT being “equal weight”, all holdings comprise 8% to 10% of the total, with re balancing occurring every June and December.

Based on the “wolf pack theory”, companies within a sector have a tendency to run together, but some run ahead while others lag behind. Of the eleven ZUT components, 5 or 6 are higher priced now than one year ago. The others are flat to down over a one year period. CU isn't the worst performer, but is down slightly. Just something I like to keep an eye on.

A handy tool to show the strength of a stock is SCTR – affectionately referred to as “scooter”.

*Definition:* “The StockCharts Technical Rank (SCTR) is a numerical score that ranks a stock within a group of stocks. ... Stocks are assigned a score based on six key indicators, which cover different timeframes. These indicator scores are then sorted and assigned a technical rank. Using SCTR tables, chartists can sort stocks according to their technical rank. This makes it easy to identify the technical leaders and laggards within a specific group.”

Here are ZUT holdings charted on one page with SCTR added. 
Using “tiny url” as the original url sometimes messes with forum templates and won't link properly.

http://tinyurl.com/ollqztj


----------



## KaeJS

zylon,

I really appreciate all of your work and the time you have taken to provide CMF with fulsome answers rich with information.

Thank you.


----------



## Eder

Yep...I'm learning something as well thanks!


----------



## scientist

bmoney said:


> Here's another interesting data point to consider.
> 
> Bank of Canada 10yr bond rates have been in decline for the better part of 7 years, and hit an all time low of 1.24% on Feb 2, 2015 just 2 weeks after CU hit an all time high of $44.04 on Jan 19. CU dividend yield on Jan 19 = 2.68%
> 
> BoC 10yr yield has rallied 54 basis points since Feb 2, adjusting CU dividend yield for rate increase should yield 3.22%
> 
> CU dividend yield as of the close today = 3.22%
> 
> Coincidence?


I grasp the idea that when stocks do poorly, bond rates increase. This is why we can watch bond rates as a tool to attempt to predict trends (as in quoted example). As has been suggested, the drop in CU could be about the potential increase in rates for bonds or Fed reserve etc. Can someone tell me the reasons why CU could be expected to be influenced hugely by a new debt ceiling, rate increases, QE, etc. when in 2008 it was resilient to the crash?


----------



## scientist

Here rallies CU, yet I still don't have my stupid transfer done...


----------



## bmoney

scientist said:


> Here rallies CU, yet I still don't have my stupid transfer done...


Back to where we started a week ago, CU will not be going any where soon with a looming threat of a rate hike, and a slow down in the oil patch.


----------



## My Own Advisor

Perfect time to buy more every quarter via DRIPs


----------



## Synergy

bmoney said:


> Back to where we started a week ago, CU will not be going any where soon with a looming threat of a rate hike, and a slow down in the oil patch.


Agreed. Interest rate risk / fear appear to be a concern in the market, potential effect on interest sensitive securities, etc. It will likely be pretty choppy until we get some clear direction. Buying opportunity in the short or long term? Maybe, maybe-not. It's a pretty big coin toss for me so I'm on the sidelines when it comes to interest sensitives - not rushing to buy more at this point.


----------



## supperfly17

My Own Advisor said:


> Perfect time to buy more every quarter via DRIPs


What do you mean? You cant choose which quarter you buy via drips and which quarter you dont. If you drip you drip, right?


----------



## Synergy

supperfly17 said:


> What do you mean? You cant choose which quarter you buy via drips and which quarter you dont. If you drip you drip, right?


I'm pretty sure MOA meant that he's happy to accumulate shares at a discount - every quarter, drips enabled, etc. Long term passive dividend growth investment strategy...


----------



## scientist

bmoney said:


> Back to where we started a week ago, CU will not be going any where soon with a looming threat of a rate hike, and a slow down in the oil patch.


Two Q's:
1.Are there specific dates where changes/no changes in fed/bond/treasury rates are announced? 
2. What is it specifically about CU that causes it to be so much more vulnerable to the possibility of a rate hike compared to other utility companies?

scientist

EDIT: I do believe that the June 1 rally was due to a dividend payment - am I correct to assume this?


----------



## Synergy

^ Personally I don't think CU is at any greater disadvantage when it comes to rate hikes compared to other utilities. You'd have to analyze the financials, compare debt levels, etc. As bmoney eluded to, the slow down in the oil patch may however hurt them a little more.


----------



## My Own Advisor

Synergy said:


> I'm pretty sure MOA meant that he's happy to accumulate shares at a discount - every quarter, drips enabled, etc. Long term passive dividend growth investment strategy...


Correct.

You can turn on and off DRIPs at will though with your discount broker but I don't bother with that, I DRIP everything.

This storm will pass...


----------



## leeder

CU isn't any more or less sensitive to interest rate changes. However, CU has underperformed because it has likely more exposure to the energy industry than its competitors, which has negatively impacted the performance. I wouldn't fret about this company too much. As it drifts lower, it's telling me to buy more.


----------



## AltaRed

The power generation side of their business is being hit harder since electrical demand is down in AB and prices have fallen off accordingly. As has been said, this too will pass. Off-tangent, but this is partly why ALA is off more than its competitors too...their power prices are down and ALA has some additional exposure to the commodity business.


----------



## scientist

Bought 130 today to set up my first DRIP!


----------



## bmoney

scientist said:


> Two Q's:
> 1.Are there specific dates where changes/no changes in fed/bond/treasury rates are announced?
> 2. What is it specifically about CU that causes it to be so much more vulnerable to the possibility of a rate hike compared to other utility companies?
> 
> scientist
> 
> EDIT: I do believe that the June 1 rally was due to a dividend payment - am I correct to assume this?


1)The next FOMC meeting is on June 16, and they meet regularly at the same times each year. 2 months in a row, then a month off, so June/July, Sept/Oct, Dec/Jan. The actual meeting dates are listed on their website.

2)Highly capital intensive industries like utilities are sensitive to interest rates for 2 main reasons: they tend to hold a lot of debt since they have long term capital investments, and they attract fixed income investors allured to yield.

CU has had a mighty run but so has the Alberta oil patch, and I think the two are closely related. Coupled with the latest rate hike fears, it makes CU more susceptible than other utilities since they have a double-whammy of concerns. Oil prices could recover which good for the patch, but with the uncertainty of the NDP Government in Alberta, and international pressure on Canada to reduce carbon emissions aimed squarely at oil sands, Alberta will be a less attractive option for investment, which CU will rely on to grow. This is why I think CU is not a great play here. Also, I have done very little analysis on CU because I don't feel it warrants my time if it does not fit my investment thesis.


----------



## My Own Advisor

scientist said:


> Bought 130 today to set up my first DRIP!


That will do it!


----------



## KaeJS

I feel bad selling CU at this price...

But it's tying up capital. I might dump it. I have 400...


----------



## KaeJS

other option is to sell 300 of the 400 and use that capital to buy other stocks I would hold long term for dividends that are also sensitive to interest rates.
FTS, REI, FCR...


----------



## gladaki

KaeJS said:


> I feel bad selling CU at this price...
> 
> But it's tying up capital. I might dump it. I have 400...


Whats the point of selling it with a loss


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## scientist

KaeJS said:


> other option is to sell 300 of the 400 and use that capital to buy other stocks I would hold long term for dividends that are also sensitive to interest rates.
> FTS, REI, FCR...


Just curious, is there a reason why you wouldn't just wait for a more favourable time to sell CU and then split between those stocks of interest?


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## KaeJS

gladaki said:


> Whats the point of selling it with a loss





scientist said:


> Just curious, is there a reason why you wouldn't just wait for a more favourable time to sell CU and then split between those stocks of interest?


Opportunity Cost.

It's tying up over $14k. How much money could I make with that $14k by the time CU recovers?
The yield is quite small. I would be receiving $118 every 3 months. There is also the possibility of further decline.


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## KaeJS

Wrote some calls for this at $36.

If I get called, then I get called.
If not.... I'll take my freemiums.


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## Homerhomer

just bought into it, great company, long term hold, if it goes lower will buy more.


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## blin10

KaeJS said:


> Opportunity Cost.
> 
> *It's tying up over $14k. How much money could I make with that $14k by the time CU recovers?*
> The yield is quite small. I would be receiving $118 every 3 months. There is also the possibility of further decline.


how do you know you'll make money by the time CU recovers? just curious ... you can loose even more by going with other trades


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## My Own Advisor

Whey sell CU at all? Just buy when stocks tank. That's just my take (and strategy).


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## gladaki

Is stock all time low ?


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## My Own Advisor

52-week low is pretty good for buying.


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## supperfly17

My Own Advisor said:


> 52-week low is pretty good for buying.


I hope you are taking into account other valuations other then a 52-week low price.


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## londoncalling

supperfly17 said:


> I hope you are taking into account other valuations other then a 52-week low price.


I chose to buy for more than its 52 week low but I prefer to buy at or near low in comparison to a 52 week high. I play the flip side of momentum. P/E in the 15.xx is range one of the lowest in 5 yrs, yield over 3% and growing predictably each year with a 8% 5 yr average growth rate, ROE slightly below 5 yr average tells me time to buy and oversold. When oil recovers be it 6 months or 6 years price will revert back. In the meantime I will hold contentedly. Could it go down further? Possibly and maybe even probably. I've never hit a perfect bottom but I do expect this business to get through the downtrend of the current commodity cycle. Commodities (and commodity reliant stocks) will rotate in and out of favour. I prefer to buy when they are unloved. 

Cheers


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## supperfly17

londoncalling said:


> I chose to buy for more than its 52 week low but I prefer to buy at or near low in comparison to a 52 week high. I play the flip side of momentum. P/E in the 15.xx is range one of the lowest in 5 yrs, yield over 3% and growing predictably each year with a 8% 5 yr average growth rate, ROE slightly below 5 yr average tells me time to buy and oversold. When oil recovers be it 6 months or 6 years price will revert back. In the meantime I will hold contentedly. Could it go down further? Possibly and maybe even probably. I've never hit a perfect bottom but I do expect this business to get through the downtrend of the current commodity cycle. Commodities (and commodity reliant stocks) will rotate in and out of favour. I prefer to buy when they are unloved.
> 
> Cheers
> 
> Cheers


Well written thank you for this. That is what I was looking for in the above question.


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## londoncalling

You're welcome. Every investor should know when why and what price they want to purchase a stock at. Those were my reasons. I plan to hold for years. Some may use this for a swing trade if oil rebounds by fall. I am starting to realize if I am thorough in my analysis and patient with my price I am more likely to see good results from my purchases. For me selling seems to be much more difficult. Most likely because I do not set a target sell price for both up and down side. For my investing strategy it is not as crucial I've tended to set my parameters a bit differently but I still have rules for selling.

Cheers (just one time this post)


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## gladaki

So according to your analysis it's good time to invest in this stock


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## Synergy

FWIW I'd rather be putting my money into non-interest sensitive plays or stocks that may be positively impacted by a rise in interest rates - CDN lifecos, US financial, etc. No harm in holding an allocation, but I wouldn't be backing up the truck on utilities with rates at all time low and nowhere to go but up. I could be completely wrong on this but over the last few months I've been trying to adjust my allocations accordingly - less REITs, less Utilites, etc. It's been working fairly well so far. I'm waiting for a good correction in utilities before jumping back in.


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## londoncalling

gladaki said:


> So according to your analysis it's good time to invest in this stock


According to my analysis it's a good time for ME to invest in this stock. 

Synergy: I agree that interest rates have more probability of rising than falling. If interest rates do rise significantly utilities and other equities will be affected. Aside from the BofC when this will happen is anybody's guess. We may not see a sharp rate rise but instead a gradual long term increase. How long have we been told interest rates are going to rise in 201X ? For me being in my accumulation phase (20+ years to go) I can afford to be a little off on timing. I usually buy in tranches sometimes over weeks, months or years depending on what happens to the stock. I have some more powder in the keg when the big correction comes. I'd be curious to see where, if at all, you see buying opportunities.

Cheers


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## MrMatt

londoncalling said:


> According to my analysis it's a good time for ME to invest in this stock.


That's actually one piece of efficient market theory that's missing.
The needs of a particular individual action may be different.
OMERS and CPP have completely different investing needs than the 70 year old retireee or 20 something worker.

I'm not sure if CU is a buy for me, but I'm considering it.

That being said, one of the biggests risks I'm afraid of now is political risk, particulary in Energy.
Political risks are both unstable foreign governments, as well as the elected governments in Canada, which traditionally haven't been a major concern. (Realistically I don't think the NDP will go too nuts, but anything is possible.)


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## Synergy

londoncalling said:


> Synergy: I'd be curious to see where, if at all, you see buying opportunities.Cheers


Off topic warming! I don't currently see any screaming buying opportunities but over the last few months I have been relatively picking away at some US financials, CDN lifecos, health care and some energy. Overall we appear to be in nosebleed territory but some sectors seem to be a little more appealing to me, that is if things play out the way I think they will - economy continues to improve, interest rates start to slowly tick upwards, etc. I've also decided to put more money into cash and real estate (physical asset I can enjoy) in case things really go south.


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## KaeJS

blin10 said:


> how do you know you'll make money by the time CU recovers? just curious ... you can loose even more by going with other trades


I have an 80%+ Win Ratio. Chances are in my favour I could make more money. But you are right, the possibility of losing more is a factor that could take place.



My Own Advisor said:


> Whey sell CU at all? Just buy when stocks tank. That's just my take (and strategy).


I am not a buy and holder. If I was, then I wouldn't sell CU. Even at this price, it does almost seem unwise to sell.
I think I might just keep writing calls on this. Maybe I will write some calls that are far out into the future...


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## londoncalling

Synergy said:


> Off topic warming! I don't currently see any screaming buying opportunities but over the last few months I have been relatively picking away at some US financials, CDN lifecos, health care and some energy. Overall we appear to be in nosebleed territory but some sectors seem to be a little more appealing to me, that is if things play out the way I think they will - economy continues to improve, interest rates start to slowly tick upwards, etc. I've also decided to put more money into cash and real estate (physical asset I can enjoy) in case things really go south.


Thanks for the reply. I am planning on waiting till fall before I deploy more cash myself but that is for the market to decide. I have some bids (UK and European stocks via ADRs, US financials, energy, health care) in at much lower prices and a few uber low bids on BNS and TD that are unlikely to get exercised.

Now back to regularly Canadian Utilities scheduled programming.

Cheers


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## KaeJS

New 52 Week Low.
Glad I wrote those calls.

I'm thinking of writing some October calls on this. The premiums aren't great, but are paying $0.80 right now for a $36 strike.
I could live with that, I think. That would also include a dividend payment of $0.30.


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## KaeJS

Placed an order to buy some at $35.10.
If it hits, this could be a quick 1-2 day flip for some cash on the side.


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## KaeJS

I cancelled my order for $35.10 around 2:30pm. Good thing I did. $34.xx!!

Edit: Not expecting to hit there, but I replaced my order for $34.75.


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## thepitchedlink

Picked up some at 34.90....I was surprised to get it


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## bmoney

Be patient, this is going lower still. Alberta's NDP government is not open for business, a 20% increase in corporate taxes is only the start. Just wait until their attention turns to those 2 coal fired plants, a big easy target on CUs back. With international pressure mounting for Canada to cut CO2, coal will be the sacrificial lamb - that's an easy choice over the oil sands.


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## scientist

bmoney said:


> Be patient, this is going lower still. Alberta's NDP government is not open for business, a 20% increase in corporate taxes is only the start. Just wait until their attention turns to those 2 coal fired plants, a big easy target on CUs back. With international pressure mounting for Canada to cut CO2, coal will be the sacrificial lamb - that's an easy choice over the oil sands.


T_____T


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## KaeJS

Protecting myself on this one.
Just sold 4 Oct '15 Calls for $1.00 @ $36 strike.

I'll take my $400 premiums and my $120 in dividends and if I get called, then so be it.


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## KaeJS

Wow. What a nice pop today.
I should have held off on writing the calls!


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## Jon_Snow

Bought a couple hundred shares in the 35's a while back...perhaps not the bottom, but likely close enough as not to matter much. Will hold for the long term, it's dividends (hopefully they continue to increase them from time to time) will add nicely to my ever increasing passive income stream. Easy peasy.


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## scientist

Jon_Snow said:


> Bought a couple hundred shares in the 35's a while back...perhaps not the bottom, but likely close enough as not to matter much. Will hold for the long term, it's dividends (hopefully they continue to increase them from time to time) will add nicely to my ever increasing passive income stream. Easy peasy.


I bought around the same / a little bit higher than you - but I'm glad I did now. I was worried that it was just going to keep going down. I am not expecting a steady flawless increase after today's events or anything, but am glad that there are gains too. Like you said, shouldn't matter in the end if I am long term holding...

If, hypothetically, things go south in the tar sands, what do you think CU's strategy would be? Would they begin to rely more on their outside-tarsands projects? (Other places around Alberta, Australia, Mexico, etc)


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## zylon

*don't forget about CU - today's low so far 33.65 - ex-dividend Nov 3rd*



blin10 said:


> you forget one huge thing: this a dividend blue chip and TA with it is not the same as with ie.facebook... in 2012 they were paying $.22 cents quarterly and now it's $0.295, if it goes back to 2012 price level it'll be a huge discount (unless something is wrong with the company)...


requoting blin10 - because that's a good point










chart source: http://www.4-traders.com/CANADIAN-UTILITIES-LIMITE-1409626/?type_recherche=rapide&mots=cu

If one is nervous about buying here, s/he could place a stop just under support (~32.00)

disclosure: sold CU covered calls a couple times, but not called away - and I added to my holding today.

_______________
"your head must be empty for your hands to be full" ~YOGI (not Berra)


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## MrMatt

Why CU and not ATCO?


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## zylon

http://www.financialwisdomforum.org/forum/viewtopic.php?f=33&t=1005&start=50#p563286

http://www.tsinetwork.ca/suitable-for/conservative-investing/highyielding-utilities-3-buys-1-hold/
(April 2014)


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## thepitchedlink

wow, quite the week at it's only tues......


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## robfordlives

Dead $ for a number of years here. Heard a fellow on BNN indicating that overall Canadians have way too many utilities in their portfolio. Anyone still holding this garbage besides me?


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## like_to_retire

robfordlives said:


> Dead $ for a number of years here. Heard a fellow on BNN indicating that overall Canadians have way too many utilities in their portfolio. Anyone still holding this garbage besides me?


For sure I hold it, along with FTS and EMA for a long time. It's part of any diversified income portfolio. 

I don't know how dead it is. If I look at my 10 year chart, CU is up 50.33% over 10 years on share price (compared to the TSX index at 14.5%). 

That an annualized return of 4.16% along with its present dividend of 4.55%. It's a cash flow machine without too much worry about losing your capital.

View attachment 17953


ltr


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## My Own Advisor

Hardly dead money. Dead money is in a long-term bond. Happy owner of a few hundred shares. They have lots of room to increase their dividend over time = more cash to me. I'm happy if others sell so I can get this stock at cheaper prices. Please continue to sell CU, and FTS, and EMA, and AQN, etc.


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## Eder

CU belongs in most portfolio's.


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## My Own Advisor

I would think so Eder. That's just me (and you).


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## gardner

My utilities mix is:

BLX	13%
CU	12%
EMA	18%
ENB	28%
FTS	29%

I am still weighted more towards EMA, ENB and FTS. Together these utilities are ~14% of my dividend portfolio as against 27% in banks or 16% in media/telecom.
CU has not done especially well for me, and it will be first out the door, if it comes to that.


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## robfordlives

Eder said:


> CU belongs in most portfolio's.


Do you still believe so? Looks like this is going nowhere fast. Why are they messing around with an acquisition in Mexico?


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## treva84

robfordlives said:


> Do you still believe so? Looks like this is going nowhere fast. Why are they messing around with an acquisition in Mexico?


Disclaimer - I hold CU

IIRC, CU has the longest dividend growth streak of any company in Canada. From an income point of view it's a good stock to hold. As with all utilities, you can't really expect much capital appreciation in the shares; instead the value comes from the dividends and dividend growth.

In the last 10 years, CU has actually outperformed the index. Assuming re-investment of dividends, the returns of XIU have been 4.9%, while CU has returned 5.3%.

Putting this return into context, other favourite utility 10 year annualized returns are as follows:
- FTS - 5.8%
- EMA - 7.0%
- AQN - 16.7%


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## AltaRed

Everyone likes to beat on a stock that has a 2-3 year slide without thinking about the context and business environment around them. CU, like any power producer in AB, has hit a perfect storm of power surplus due to the oil downturn. This too will pass.


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## My Own Advisor

I agree. I would find it hard to believe this stock could ever go under. A nice entry point and/or if you're like me and you reinvest your dividends for a future retirement day, happy to DRIP x2 shares per quarter in this one.


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## peterk

Buying more.


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## robfordlives

I strongly suggest anyone considering a position look at the latest insider sales.


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## robfordlives

Can someone please explain their Mexico acquisition strategy?


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## AltaRed

robfordlives said:


> Can someone please explain their Mexico acquisition strategy?


Try this http://www.atcomexico.mx/en-ca/Pages/default.aspx and also click on Mexico here http://www.atcomexico.mx/en-ca/Pages/default.aspx It is my belief they know Canada has very little running room and may be a 'lost cause' given much of the frenetic movement to stall any kind of development, and much like FTS and EMA know it is as well, are spreading their wings globally where development dollars are welcome.


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## robfordlives

Yes, they said as much today citing the current environment "heartbreaking". Unlike others I do not see this as an opportunity. Investing in jurisdictions they know nothing about is much more expensive than sticking to home. These assets they are buying have a seller. Wonder what they know more than CU?


http://calgaryherald.com/news/local...n-a-matter-of-minutes-so-close-and-yet-so-far


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## AltaRed

Dunno. What did FTS and EMA find compelling in buying all those US utilities? If the purchase is accretive to the shareholder, then there is value in having made the purchase. Perhaps the seller just wanted out, i.e. didn't have the financial and human resources to fund all their opportunities and thus needed to shed assets, or maybe they'd fallen out of favour with the local warlord, or maybe they just don't have the project savvy to manage development projects, etc. There are many reasons why a deal can be a win-win to both buyer and seller. CU (ATCO Power) has had good success in Australia so maybe the model is translatable to Mexico et al. Quite often, it is specific project management expertise and operational savvy/technology that can make a silk purse out of a sow's ear.

What does BNS see in Latin America and the Caribbean? Why did Suncor and CNRL buy out the majors' oil sand assets?

I believe the Southerns don't throw their money around foolishly. They've had a long track record of prudent stewardship. I think Nancy had the opportunity to learn from good ol' Dad for many year - the question probably still is.. did she? Too soon to tell perhaps.


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## RBull

robfordlives said:


> Yes, they said as much today citing the current environment "heartbreaking". Unlike others I do not see this as an opportunity. *Investing in jurisdictions they know nothing about is much more expensive than sticking to home.* These assets they are buying have a seller. Wonder what they know more than CU?
> 
> 
> http://calgaryherald.com/news/local...n-a-matter-of-minutes-so-close-and-yet-so-far


They seem to be saying and acting to the contrary. Like numerous other large CDN corporations that seem to be doing well by it, rather being limited by increasing regulation/cost and organic growth limits here. 

But like AR said the company has a pretty strong track record. Maybe you see something others don't or maybe CU sees something or has something (expertise/money etc) the seller doesn't. I don't know but no way I'm selling for the forseeable future.


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## MrMatt

Cu/Atco appear to have been hit by the oil issues and havent fully recovered yet. 

The seem to have gotten out of the fossil fuel generation, and are really in Natural gas and electricity. 
Any thoughts?


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## AltaRed

Electrical prices will plummet with reduced oil production and processing as oil is shut in and oil field activity decreases.


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## MrMatt

AltaRed said:


> Electrical prices will plummet with reduced oil production and processing as oil is shut in and oil field activity decreases.


Much of ATCO/CU facilities are outside the oil fields.


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## AltaRed

MrMatt said:


> Much of ATCO/CU facilities are outside the oil fields.


Thought most of Atco/CU generation is part of the AB grid. Has nothing to do with oil fields directly than the overall demand for electricity in AB will be down. I suspect Capital Power is in same dilemma, TransAlta, etc.


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## Ponderling

Got into CU again today. Have held ACO.X through Covid and it is not nearly as sunny. I did luck into a nice rise in RNW when Transalta poured a bunch of assets into RNW so its price floated up. Sold it and that is how I am back at CU. The renewables stocks are all a bit too overheated at the moment for me to have an appetite for them.


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## londoncalling

I have a small position in CU and am considering adding to the position either directly or through ACO.X. If Reuters can be trusted there is a substantial difference in payout ratio. Does the yield spread between the two entities justify the difference in ratio for shareholders? I know many here as well as FWF have held one, the other or both. Better value(P/E, P/B, and P/S) seems to point to ATCO. I do expect the AB economy and the energy industry to pick up (not necessarily to what it was once upon a time) and should bode well for CU/ACO.X. 

ACOx.TO - ATCO Ltd. Key Metrics | Reuters 
CU.TO - Canadian Utilities Limited Key Metrics | Reuters


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## Eder

I like CU and own them...I don't like the trailer business though.


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## londoncalling

Thanks Eder.

Canadian Utilities Limited Class A (CU: TSE) Stock price and news – Google Finance

I took a quick look at a comparative chart but I don't believe this is total return. At the end of the day, it may not make a huge difference.

I have added a few others to the second link.

Canadian Utilities Limited Class A (CU: TSE) Stock price and news – Google Finance


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## Eder

Its pretty close total return ...20 years Atco is ahead, 10 years CU is ahead. The anti oil kick the current government is on does not bode well imo for engineering.


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