Canadian Utilities – New Buy

Canadian Utilities
Canadian Utilities – New Buy

Hey how are you doing? This week we decided to add to our kids Resp Account. Currently their account is invested in Enbridge, CNR and Canadian Utilities. With CU’s ex dividend date right around the corner (August 9th), we decided to make the buy. While it may not be a steal, I feel its at a good entry point and long term those drips will be huge!

Who Is Canadian Utilities?

Canadian Utilities Limited, an ATCO company, is a diversified global enterprise with assets of $21 billion and approximately 5,400 employees. Canadian Utilities Limited is engaged in Electricity, Pipelines & Liquids and Retail Energy.

From the safe and reliable delivery of natural gas and electricity to providing modular housing and water infrastructure solutions, Canadian Utilities has a consistent record of quality service and products, customer satisfaction, an excellent safety record and sustainable growth for our share owners. (Source – CU website)

You Probably know Canadian Utilities for

Most people know of Canadian Utilities because they are Canada’s best dividend All star. They have continuously raised their dividend every year for the last 46 years. That means they have boosted that div since 1972…. But Rob, we are in a rising interest environment, that’s bad for utilities.

Remember those crazy 20% interest years in the 80’s? I don’t really but can imagine how hard things must of been. Mortgage rates would be insane! Well CU kept raising their dividend even during those times! So I’m not worried about that continuing with our tiny little interest rates currently.

The Downsides

After their last quarter their earnings weren’t as high, this caused their payout ratio to increase and p/e ratio to go from around 23 times to what is now 32.4. Which is quite high, but based on their ongoing projects as well as their solid track record of dividend increases. I feel they will bounce back, those numbers will go back to normal and the stock price will appreciate.

The Buy

We purchased an additional 35 shares of Canadian Utilities. The stock offered a yield of 4.8% at time of purchase. This will add an additional $55.06 to our yearly forward income. But the best part is, now we will be able to drip 2 shares every quarter instead of one. Add in their 2% discount on dripped shares, winning! This buy also pushes Canadian Utilities to just under 5% of my portfolio, so its a full position.




Conclusion

We now have $1000 dollars left in contribution room to our Resp account total. It is crazy how fast this adds up, our kids are 5 and 6 months and already have a pretty massive stack to work with in the future. Compound that for another 14-20 years, I think we will be fine. Of course who knows how much post secondary education will be at that time though…………….

What are your thoughts? Are you buying or watching cu? Or staying away?

Cheers!

16 Responses

  1. Rob, Love the 46 year dividend history. US utilities have rallied off their lows the last couple months even in the face of rising rates. Have CDN utilities rallied along with? Tom

    ps. Is everyone on vacation? Usually by the time I get here 50 of your wildest fans have already left a comment. What gives?

    • Rob says:

      haha Hey Tom

      I still got my groupies they just tend to be more active on twitter, it seems.

      The subscribers and daily views keep increasing so they got to be here… I hope. lol.

      As for utilities I dont really think they have rallied, kinda keep going sideways.
      Seems like a great time to buy them while they are out of favour.

      cheers man!

  2. Craig says:

    Gonna buy more myself the minute it drops below $32. Shoulda bought today for the next divvy and not fixate on price as this dividend payment would have helped the bottom line.

    • Rob says:

      hey Craig timing is hard… lol last week I thought it would drop below 31 bucks. I waited and waited then here I am at around 32 bucks.

      ex dividends are good forces you to buy the stock you want vs just waiting and waiting and hoping for a cheaper price.

      Long term whats a buck? haha.

      Glad to see alot of others have been watching cu.

      cheers Craig!

  3. German says:

    Very nice buy! I also bought CU. The 4.8% from such quality stock is a sweet deal. When the interest rates were 20%, home prices were 10 times less. Interest decreased by 10x but home prices increased by 10x. Lol we are screwed anyway.

    • Rob says:

      hey German

      I saw your buy, very nice purchases.

      Its true, it all balances out. Just pointing out how they continued to raise their dividend in that environment.

      cheers man!

  4. PCI –

    Nice job, utilities can’t hurt, great yield and great add to your forward income.

    -Lanny

  5. May says:

    I have a few hundreds of aco.x and cu each. All of them under water, LOL.

    Maybe should buy some more to average down the cost.

    • Rob says:

      lol nice / shitty.

      Their dividend history is impressive though. Long term you should be fine.

      its your call if you should add more, depends on the size of your position in your overall portfolio.

      cheers May!

  6. Leo T. Ly says:

    I own most of the major utilities in Canada, Enbridge, Fortis and Emera. I don’t own Canadian Utilities at the moment but it on my watch list. The 46 continuous dividend increase is a major factor for me to consider this stock. I may be adding some if the current price drops a little.

  7. Utilities are always a good buy. I would not worry much about rates hikes … especially if its a long buy. Nice buy.

  8. GYM says:

    My husband has a lot of CU. I am a FTS girl myself. Great buy and congrats on topping up that RESP to the max!!

Id love to Hear What You Think

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: