Friday, November 15, 2013

For retirement income, Fortis and Emera worth a look

According to Scotia Bank, Fortis is Canada's largest regulated distribution utility holding company. It has over 2 million retail natural gas and electricity customers plus a small portfolio of real estate holdings and stakes in 3 Caribbean regulated electricity distribution companies (Cayman, Turks, Belize). It also has a hydro-power operation in Belize.

All that is well and good but what really draws my interest is the dividend teamed with relatively low risk. Today I noticed that the dividend was at 3.9%. I try not to invest in anything that pays less than 4%. The Fortis stock price is down about a third of a percent at this moment. If it drops a wee bit more, the yield will be in my target zone.

I don't own a lot of utilities. I'd like to have some XUT, the iShares ETF based on Canadian utilities, but since very few companies compose the majority of this ETF, buying these stocks directly and not having an ongoing MER to contend with seems attractive.

I'd like to see Fortis (FTS) down at about $31 and I'd be in.

The other Canadian utility that I am giving serious consider is Emera (EMA). The Scotia Bank has this to say about Emera. Emera is a diversified utility holding company with core asset in Nova Scotia and significant investments in three other areas: two regulated electrical utilities in New England; a gas pipeline from Saint John, New Brunswick, to the Boston area; and a controlling interest in two Caribbean regulated electric utilities. It also has some smaller but growing investments all centred around utilities.

Emera has a yield of 4.9%. Like Fortis the risk is said to be low with EMA, the yield is more than acceptable and it has some upside potential. A quick look about the Net finds others who, like me, see a buying opportunity in the offing.

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