# Atlantic Power Corporation (ATP.TO)



## gibor365 (Apr 1, 2011)

Just read that some US retired guys like holding ATP.TO (AT at NYSE)... Took a look at this one, nive monthly dividend at 8% yield, very low beta 0.15, current price $14.54, very strong support at $13.20.
But fundamentals are not that good.
Anyone hold this stock? Any opinions?


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## PMREdmonton (Apr 6, 2009)

They have a high PE, a ridiculous payout ratio and actually pay out virtually 100% of FCF. They have just completed an acquisition and in the restructuring of the two companies management believes that FCF will increase significantly so that the dividend ends up being well covered.

The market seems to agree as they have had a nice run reccently.

I am still not 100% sure about the sustainability of the dividend.


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## gibor365 (Apr 1, 2011)

PMREdmonton said:


> They have a high PE, a ridiculous payout ratio and actually pay out virtually 100% of FCF. They have just completed an acquisition and in the restructuring of the two companies management believes that FCF will increase significantly so that the dividend ends up being well covered.
> 
> The market seems to agree as they have had a nice run reccently.
> 
> I am still not 100% sure about the sustainability of the dividend.


This is exactly my concern. On one hand it's better to wait until Feb 28 report and see if FCF started to improve, but on other hand it can be too late (it can become too expensive)... imho, now TA is better bet than ATP due to better fundamentals, but maybe I'm wrong ....


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## PMREdmonton (Apr 6, 2009)

gibor said:


> This is exactly my concern. On one hand it's better to wait until Feb 28 report and see if FCF started to improve, but on other hand it can be too late (it can become too expensive)... imho, now TA is better bet than ATP due to better fundamentals, but maybe I'm wrong ....


Roger Conrad has recommended ATP for some reason.

He doesn't like TA because he thinks they will have to rebuild their power plants overtime as they rely too much on coal which will have to be phased out over time.

If you want to go international NGG, EXL, CPL, PPL and Dominion all look reasonably good as dividend plays.


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## Potato (Apr 3, 2009)

I got some shares as part of the Capital Power takeover, and dumped them as soon as I could (bad timing in retrospect, but still made money on the deal).

Main reason being the very high interest rate on the last bond issue: the debt guys were worried, and they're usually the smart money. If I remember, I'll check back in with them after the next tranche of debt rolls over to see how that's taken up.


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## Loon (Apr 12, 2012)

I was looking at ATP and thinking of buying in. What happened? 

I'm looking to add a CDN utility, something stable with 5 to 6% yield. I have TA, could add to that or get something else. Any suggestions?


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## GoldStone (Mar 6, 2011)

Loon said:


> Any suggestions?


I bought CPX last week @ $21.28. 5.6% dividend, reasonable valuation and payout ratio.

ADDED: like TA, it's not a true utility. It's an independent power producer. Both are exposed to Alberta market-based electric rates.


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## rikk (May 28, 2012)

gibor said:


> Just read that some US retired guys like holding ATP.TO (AT at NYSE)... Took a look at this one, nive monthly dividend at 8% yield, very low beta 0.15, current price $14.54, very strong support at $13.20.
> But fundamentals are not that good.
> Anyone hold this stock? Any opinions?


Hello ... I now hold at $13/share ... my understanding, current dividend 0.096/month should be good through 2013 ... thereafter, depending, may require reduction of 25% which would be .072/month ... if so, dividend would be 6.6% in my case ... we'll see.


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## doctrine (Sep 30, 2011)

Would avoid ATP at all costs. Dividends greater than earnings - eventually you'll lose capital.


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## Canuck (Mar 13, 2012)

sold atp a few months ago....phew.

Loon, why don't you look at Brookfield Renewable Energy or Algonquin


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## Loon (Apr 12, 2012)

Canuck said:


> Loon, why don't you look at Brookfield Renewable Energy or Algonquin


Brookfield looks ok but I'm looking for eligible dividends outside of RRSP. What about Innergex (INE)?

Algonquin looks ok. I'd like to find bigger market cap as I'm kind of new to this but there does not seem to be a lot of higher yielding large-cap utilities in Canada. These are both around $1B.


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## HaroldCrump (Jun 10, 2009)

What about CU?
It's about $8.5B market cap.
Yield is lower, so depends on what is more important to you.


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## blin10 (Jun 27, 2011)

by looking at the chart for atp it's a good time to start position, I dipped my toes in...


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## Canuck (Mar 13, 2012)

how about Emera and Fortis ? not huge yielders but pretty consistently increase them. Lower volatility and eligible for tax credit.


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## Argonaut (Dec 7, 2010)

Haven't you guys learned from TransAlta? If you have to have a utility, there are some better options already mentioned in this thread.


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## underemployedactor (Oct 22, 2011)

blin10 said:


> by looking at the chart for atp it's a good time to start position, I dipped my toes in...


With a dividend payout ratio of 120%? 
I think you're looking at the wrong chart.


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## blin10 (Jun 27, 2011)

how low you want the price to be, $2 a share ? 



underemployedactor said:


> With a dividend payout ratio of 120%?
> I think you're looking at the wrong chart.


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## zylon (Oct 27, 2010)

Couldn't resist doing a quick trade when ATP was slammed last week; I'm out now.
I believe last day for 2012 tax loss selling is Dec 24 (early closing)


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## james4beach (Nov 15, 2012)

Instead of jumping from one high yielder to the next, why not just buy a basket of them? ZUT holds pretty much all of these utilities in equal weighting.

I hold ZUT (yields 5.1% after mer). I've also made some projections in case the high yielders cut their distributions, and get a projected 4.5% yield (after mer) for the group. Of course, if distributions are cut you're probably going to see a capital loss, whether or not you go with an individual stock or ETF.


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## blin10 (Jun 27, 2011)

you have control in what you're holding, that can be a good and bad thing



james4beach said:


> Instead of jumping from one high yielder to the next, why not just buy a basket of them? ZUT holds pretty much all of these utilities in equal weighting.
> 
> I hold ZUT (yields 5.1% after mer). I've also made some projections in case the high yielders cut their distributions, and get a projected 4.5% yield (after mer) for the group. Of course, if distributions are cut you're probably going to see a capital loss, whether or not you go with an individual stock or ETF.


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## doctrine (Sep 30, 2011)

Canadian Utilities, Emera and Fortis are just about the only high quality, profitable, under 100% dividend payout ratio utilities in Canada. The others (ATP, CPX, TA, NPI, AQN) should be avoided at all costs. I believe if you compared a weighted average of those 3 versus ZUT, you'd find a pretty significant divergence - in fact, they're the only reason ZUT hasn't lost more in the last year.


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## blin10 (Jun 27, 2011)

"The others (ATP, CPX, TA, NPI, AQN) should be avoided at all costs" that's a fouls statement


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## doctrine (Sep 30, 2011)

That's just my opinion. I've looked at all of their financial statements, and all of them pay more dividends than net income, and some of them have more serious issues (declining revenue/earnings per share). Of course, all of that is likely priced in already, but investing is risky enough that I'd rather stick with something safer. You might be ok, but if the market crashes, those will crash harder.


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## HaroldCrump (Jun 10, 2009)

Out of the lot mentioned above, AQN is a weird beast, isn't it.
I seem to recall that it was a reverse take over of some pharma company to gain access to its accumulated tax loss pools.
We had a spate of these between 2007 and 2010 because of the changes in income trust rules.
The accumulated tax loss pools by pharma or R&D companies enabled the acquirers to pay out high distributions, without having enough real net earnings.

I don't remember all the names now, but a couple of others were Superior Plus (SPB), Premium Brands (PBG), and Colabor Group (GCL).


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## james4beach (Nov 15, 2012)

doctrine said:


> Canadian Utilities, Emera and Fortis are just about the only high quality, profitable, under 100% dividend payout ratio utilities in Canada. The others (ATP, CPX, TA, NPI, AQN) should be avoided at all costs. I believe if you compared a weighted average of those 3 versus ZUT, you'd find a pretty significant divergence - in fact, they're the only reason ZUT hasn't lost more in the last year.


That's a fair warning, doctrine


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## Hawkdog (Oct 26, 2012)

What about CSE? now that they have lowered their dividend payout


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## doctrine (Sep 30, 2011)

http://www.ibtimes.com/press-releas...releases-fourth-quarter-year-end-2012-results

_As a result of this review, the Board, with management's recommendation, has unanimously approved a reduction in the annual dividend level to Cdn$0.40 per share, or Cdn$0.03333 per share on a monthly basis_

For those counting, a $0.40 annual dividend is a 65% cut. 

This is the #2 holding of CDZ's Dividend Aristocrat index, and for the life of me I cannot figure out how they possibly interpreted this company as an Aristocrat. 

On the plus side, their losses are narrowing, perhaps they can throw together a profit in the future. The new yield is 3.9%, which may rise if the stock bottoms out tomorrow (CDZ, at least, will have a couple million shares to sell as they weight by yield). That seems more reasonable, and in line with other utilities (FTS, EMA).


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## gibor365 (Apr 1, 2011)

JE and ATP cut dividends, interesting how it will affect ZUT and CDZ distibutions....


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## doctrine (Sep 30, 2011)

ATP won't be dropped from the S&P Dividend Aristocrats index until at least the end of the year, so CDZ is stuck with it for now. If the new yield ends up at 5.5%, CDZ will have to sell half of its 4 million shares. Of course, they'll sell them at whatever the new price is starting tomorrow.

_Atlantic Power Corp. (NYSE:AT) shares tumbled 23.77 percent to $7.60 in post-market trading. Its fourth quarter net loss widened to $57.9 million or $0.50 per share from $27.8 million or $0.27 per share in the same period last year and also widely missed Reuters estimation for a loss of $0.05 per share._

And they didn't even mention the 65% dividend cut...


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## blin10 (Jun 27, 2011)

anyone tipping their toes besides me ? :>


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## OptsyEagle (Nov 29, 2009)

In my opinion, a dividend at $0.40 with an estimated payout ratio of 65%, means that distributable cash is estimated by management to come around $0.60 per share. If I put an 8 times multiple on that, it gives me a $4.80 share price. 

Now you can always put a higher multiple on it, if you want, but I would suggest keeping some upside for yourself, instead of giving it all to the person who sells you their shares.


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## Squash500 (May 16, 2009)

gibor said:


> JE and ATP cut dividends, interesting how it will affect ZUT and CDZ distibutions....


 It's certainly affected the CDZ share price as well. I'm just glad that I don't own ATP stock outright. I believe that ATP is CDZ's 2nd top holding at 4.19% of the ETF.


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## gibor365 (Apr 1, 2011)

Squash500 said:


> It's certainly affected the CDZ share price as well. I'm just glad that I don't own ATP stock outright. I believe that ATP is CDZ's 2nd top holding at 4.19% of the ETF.


I think so ...and the 1st is AGF.B and I won't be surprised if they cut dividends too


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## Squash500 (May 16, 2009)

gibor said:


> I think so ...and the 1st is AGF.B and I won't be surprised if they cut dividends too


 Gibor....AGF.B is the top holding of CDZ at around 6% of the ETF. This makes a good argument for owning ETF's instead of individual stocks. CDZ is down around 1.5% today whereas ATP is down around 29% today the last time I checked.


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## gibor365 (Apr 1, 2011)

Squash500 said:


> Gibor....AGF.B is the top holding of CDZ at around 6% of the ETF. This makes a good argument for owning ETF's instead of individual stocks. CDZ is down around 1.5% today whereas ATP is down around 29% today the last time I checked.


This makes a good argument not to hold AGF.B 
P.S. it's not only drop on price, also most likely , CDZ distributions will be less


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## BlackThursday (Apr 25, 2011)

gibor said:


> This makes a good argument not to hold AGF.B
> P.S. it's not only drop on price, also most likely , CDZ distributions will be less


What it does is simply make a good argument for diversification. CDZ is a bag of companies. Of course the impact of any company-specific disaster will be much less with a bag of companies than simply holding that disastrous company alone.


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## HaroldCrump (Jun 10, 2009)

Well, this is all an argument for not owning garbage companies like ATP - either directly or through an ETF.


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## Sampson (Apr 3, 2009)

HaroldCrump said:


> Well, this is all an argument for not owning garbage companies like ATP - either directly or through an ETF.


+1


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## Squash500 (May 16, 2009)

HaroldCrump said:


> Well, this is all an argument for not owning garbage companies like ATP - either directly or through an ETF.


 HC...fair enough. Obviously ATP is a garbage company. At least the ishares.ca website is very transparent and makes it 100% clear what's in the CDZ every day etc. I guess what I'm trying to say is that I have no one to blame but myself for buying the CDZ. However I'm still going to hold on to the CDZ because it didn't go down that much today.

Imagine the investors who own ATP as part of a mutual fund holding. They would have no clue that ATP is even a holding of a specific mutual fund because of the high portfolio turnover and total lack of transparency of mutual funds in general. Therefore my new conclusion is that it's better to own ETF's then mutual funds for a myriad of reasons. 

One often overlooked reason is lack of transparency of mutual funds in general. You usually only get the top 10 holdings of a mutual fund and that could be six months out of date by the time you read it?

Also the annual and semi-annual reports you get from mutual funds are often six months out of date as well. I guess what I'm trying to say is that a mutual fund manager could have added ATP to their mutual fund in the last three months (for example) and the mutual fund owner would have no clue whatsoever.


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## liquidfinance (Jan 28, 2011)

Squash500 said:


> HC...fair enough. Obviously ATP is a garbage company. At least the ishares.ca website is very transparent and makes it 100% clear what's in the CDZ every day etc. I guess what I'm trying to say is that I have no one to blame but myself for buying the CDZ. However I'm still going to hold on to the CDZ because it didn't go down that much today.
> 
> Imagine the investors who own ATP as part of a mutual fund holding. They would have no clue that ATP is even a holding of a specific mutual fund because of the high portfolio turnover and total lack of transparency of mutual funds in general. Therefore my new conclusion is that it's better to own ETF's then mutual funds for a myriad of reasons.
> 
> One often overlooked reason is lack of transparency of mutual funds in general. You usually only get the top 10 holdings of a mutual fund and that could be six months out of date by the time you read it?



I think the best thing you can do Squash when looking at these ETF products is to look at the top holding and then have a quick glance at the financials. You don't need to trawl through the reports. Just look at the individual charts, payout ratio dividend history and make the decision for yourself. I have specifically avoided a couple of these products because they hold companies like JE and Atlantic Power.


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## Squash500 (May 16, 2009)

liquidfinance said:


> I think the best thing you can do Squash when looking at these ETF products is to look at the top holding and then have a quick glance at the financials. You don't need to trawl through the reports. Just look at the individual charts, payout ratio dividend history and make the decision for yourself. I have specifically avoided a couple of these products because they hold companies like JE and Atlantic Power.


Excellent advice LF. Originally I liked the fact that CDZ was a bit different than XDV and XFN as far as holdings went. However IMHO both ATP and AGF.B are very volatile companies. In fact the top 10 holdings of the CDZ are somewhat unusual choices IMHO.

I might prune down some of my CDZ shares next week and maybe just stick with the XFN and XDV? Originally I bought the CDZ to diversify my XFN and XDV holdings.


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## blin10 (Jun 27, 2011)

man this POS is the only red in my portfolio... that's what happens when I try to get rich quick, good thing I picked this garbage up around $6 and not $14...


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## Toronto.gal (Jan 8, 2010)

Another high yielder disaster.

A drop of over 60% in exactly 3 months.


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## james4beach (Nov 15, 2012)

Down -16.6% today on quadruple the normal volume.

At 2013-09-30, ZUT still held ATP but looking at today's ZUT holdings I don't see ATP listed.

So it appears that ZUT dumped its ATP (around 4 million shares) some time between September 30 and today. Anyone know more about that?


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## james4beach (Nov 15, 2012)

The methodology page for Dow Jones Canada Select Equal Weight Utilities Index (which ZUT follows) says market cap must be at least $1 billion CAD

So that's probably why ATP got dropped, and dumped


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## My Own Advisor (Sep 24, 2012)

Most yields over 6% are unsustainable long-term. ATP, JE and others have been there for a few years. Bound for trouble. Buyer beware.

I think a decent energy play is NPI.

More conservative ways to hold CDN utilities are FTS, CU, EMA.


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