A solid Resp stock – Hydro One

hey hey hey!

Well back in February I sold our entire position in Hydro One but they have just proved me wrong. ( I sold between $23-24 a share so it’s all good) I thought hydro one was a stagnant stock because the government of Ontario was going to lower rates and say they won’t increase rates over inflation for the next 4 years.

A solid Resp stock - Hydro One

Hydro one has basically a monopoly in Ontario. While there are some small suppliers still, Hydro one owns the market. You want power here you generally get it from them. The plus/ negative is it’s government regulated that’s a big reason I sold previously.

Last week Hydro One announced the purchase of Avista Corp for reportedly 6.8 billion which is expected to close following approvals sometime next year. It’s nice to see them want to expand and I think they had too. (Although I’m not a fan of the coal aspect)

At the current price they generate a 3.9% dividend and are $1.30 above their 52 week low. They are also close to their original price when Hydro one first went public. I feel Hydro one is a very safe company and will probably be less volatile in a market correction and now has some room to grow. (with the acquisition)

So after their recent move I decided to buy 200 shares at $22.64 each in our son’s RESP account. Like I have said before I can lose money in our tfsa etc but it seems the wife is most defensive of his RESP (keep in mind you only lose when you sell or they go bankrupt). 200 shares at .22 cents per quarter will bring in $44 four times a year. This will drip at least one stock per quarter. It also increases our yearly dividends by $176 and bumps the utility sector back up to #3 in our portfolio.

Currently his RESP has 100 Enbridge stocks and now 200 Hydro one stocks and some more cash but I’m waiting for the government to grant us the 20% match for the year before I deploy the rest.

What do you think of the buy? Should I have waited for the deal to finalize? What company or companies are you holding in your kids RESP?


EDIT – Due to the political aspects in Ontario of this stock, we sold it.

8 Responses

  1. Hey PCI,

    I’m not familiar with Hydro One (because Germany is far away;-) ), but it seems like a good move. 3,9% yield is solid and 172$ for the year sounds great! …Utilities are usually reliable income stocks and i plan on adding in that department. As of right now i own only some shares of Southern Co, but Consolidated Edison is on my watchlist. And i’ll take a look into Canadian stocks…


  2. John R says:

    simple answer yes

    Compare it to Bell Canada & I qualify that with a real story of this little old lady I met in the early 2000’s the MIL of a guy that I worked with

    In 1947 when she got married her Dad gave her 100 shares of the old Bell Canada. She told me the stock was around $25/share.

    From 1947 till 2002 the stock had split several times along the way the 100 shares became approx 4900 shares. All through those years Bell, then Northern Telecom to Bell Aliant & what is now BCE.

    The old gal passed away in 2010 & the stocks passed onto her now 70 year old daughter

    So lets take as its now called BCE close to $60/share, pays approx $2.80/share x 5000 = $14,000 in dividends from that original 100 shares in 1947.

    Is Hydro one here to stay – well of course it is.

    Good investment

  3. PCI, I’m also not familiar with that stock, but as you know, I’m a huge fan of increasing the accumulation of as much shares as possible in stocks that pay dividends. Good luck on the purchase.

  4. John R says:

    aren’t you pleased that you bought back into Hydro one?

Id love to Hear What You Think

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