CANADIAN UTILITIES LTD. - Toronto symbols CU $37 and CU.X $37;

CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $37 and CU.X [class B voting] $37; Income Portfolio, Utilities sector; Shares outstanding: 260.1 million; Market cap: $9.6 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.canadianutilities.com) distributes electricity and natural gas in Alberta and Australia. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see page 14) owns 53.1% of the company.

In the three months ended September 30, 2013, Canadian Utilities earned $127 million, up 8.5% from $117 million a year earlier. Earnings per share rose 4.8%, to $0.44 from $0.42, on more shares outstanding.

Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 6.7%. Revenue gained 5.7%, to $755 million from $714 million, mainly due to higher power rates.

Between 2013 and 2015, Canadian Utilities expects to spend a total of $6 billion on upgrades to its power distribution systems in Alberta. These investments include $1.8 billion on a 485-kilometre power line from northeast of Edmonton to southeastern Alberta.

Canadian Utilities is also planning other improvements in northern Alberta that will help it take advantage of rising power demand from new oil sands projects.

The company probably earned $2.19 a share in 2013, and the stock trades at 16.9 times that estimate. As well, Canadian Utilities recently raised its dividend by 10.3%. The new rate of $1.07 a share yields 2.9%.

The class A non-voting shares are more liquid than the class B voting shares.

Canadian Utilities class A stock is a buy.

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