Canadian Utilities – New Buy

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!

Rob

Hey I’m Rob, creator of Passive Canadian Income.

In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.