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Penny stock Distinct Infrastructure Group has built an impressive client list for its cable installation and communications services, but the company’s high debt adds risk.
Rising interest rates generally reduce the appeal of income stocks, including utilities. However, recent acquisitions by these four industry leaders—and their new projects—set them up for years of higher dividends.
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $31 and CU.X [class B voting] $31; Income Portfolio, Utilities sector; Shares outstanding: 272.1 million; Market cap: $8.4 billion; Price-to-sales ratio: 1.9; Dividend yield: 5.1%; TSINetwork Rating: Above Average; www.canadianutilities.com) distributes electricity and natural gas in Alberta and Australia....
A: Distinct Infrastructure Group, $0.35, symbol DUG on the TSX Venture Exchange (Shares outstanding: 44.8 million; Market cap: $17.0 million; www.diginc.ca), provides design, engineering, construction and maintenance services to the telecommunications, infrastructure and utilities industries....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $31 and CU.X [class B voting] $31; Income-Growth Portfolio, Utilities sector; Shares outstanding: 272.1 million; Market cap: $8.4 billion; Dividend yield: 5.1%; Dividend Sustainability Rating: Highest; www.canadianutilities.com) distributes electricity and natural gas in Alberta and Australia....
All four of these power and gas utilities reported lower earnings for the second quarter of 2018. Moreover, rising interest rates have hurt their appeal among income-seeking investors. Higher rates will also increase their borrowing costs as they raise funds for new projects.
Even so, most of their revenue comes from regulated operations....
Even so, most of their revenue comes from regulated operations....
Share prices for these four power producers have dropped recently. That’s mainly because rising interest rates have increased the appeal of bonds for income-seeking investors. As well, higher interest rates will make it more expensive for utilities to refinance their own outstanding bonds.
However, all four of these utilities get most of their cash flow from rate-regulated businesses, so they should be able to pass on any higher costs to their customers....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $34 and CU.X [class B voting] $34; Income-Growth Portfolio, Utilities sector; Shares outstanding: 271.1 million; Market cap: $9.2 billion; Dividend yield: 4.6%; Dividend Sustainability Rating: Highest; www.canadianutilities.com) distributes electricity and natural gas in Alberta and Australia....
Rising interest rates have increased the attractiveness of bonds and hurt interest in high-yielding dividend stocks like these four utilities. However, steady cash flows from their high-quality operations will continue to let them keep increasing their payouts....
CANADIAN UTILITIES LTD. $39 (www.canadianutilities.com) distributes electricity and natural gas in Alberta and Australia. The company earned $0.30 a share in the third quarter of 2017, down 25.0% from $0.40 a year earlier. If you disregard gains on the sale of assets and other unusual items, earnings were unchanged....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $38 and CU.X [class B voting] $38; Income-Growth Dividend Payer Portfolio, Utilities sector; Shares outstanding: 268.1 million; Market cap: $10.2 billion; Dividend yield: 3.8%; Dividend Sustainability Rating: Highest; www.canadianutilities.com) distributes electricity and natural gas in Alberta and Australia....