canadian utilities
ATCO LTD. $45 has increased its quarterly dividend by 6.0%, to $0.265 a share from $0.25. The new annual rate of $1.06 yields 2.4%. Buy. CANADIAN UTILITIES LTD. $42 is 52% owned by ATCO, and is ATCO’s main subsidiary. Like its parent, Canadian Utilities is raising its dividend. The new quarterly payment is $0.3775 a share. That’s up 7.1% from $0.3525. The new annual rate of $1.51 yields 3.6%. Buy. MOLSON COORS CANADA INC. $42 earned $3.81 a share in 2009, up 40.6% from $2.71 in 2008 (all amounts except share price in U.S. dollars). Savings from the July 2008 merger of its U.S. brewing operations with those of SABMiller were the main reason for the gain. Revenue fell 36.5%, to $3.0 billion from $4.8 billion. That’s because accounting rules force Molson Coors to recognize only its proportionate share of the U.S. joint venture. Best Buy.
Tax-loss selling (or tax-loss harvesting) is a strategy for lowering your Canadian capital gains tax that involves selling a security at a loss in order to offset your capital gains. You can then deduct these losses against your taxable capital gains in the current tax year. For example, December 24 is the 2009 deadline for tax-loss selling on the Toronto Stock Exchange. If you sell at a loss on or before that date, you could deduct your loss against your 2009 capital gains. However, you can also carry your loss back for the three previous years (2008, 2007 and 2006), or carry it forward indefinitely to offset past or future capital gains.
Beware of the “superficial loss rule” when using tax-loss selling to lower your Canadian capital gains tax
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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $39 and CU.X [class B voting] $39; Income Portfolio, Utilities sector; Shares outstanding: 125.6 million; Market cap: $4.9 billion; Price-to-sales ratio: 1.8; SI Rating: Above Average) distributes electricity and natural gas in Alberta. It also operates power plants in other parts of Canada, and in the U.K. and Australia. In August, Canadian Utilities received preliminary approval from the Alberta government to build and operate a new high-voltage transmission line between Edmonton and Calgary. Final approval for this project should come later this year. The line is part of a wider plan to make Alberta’s electricity grid more reliable. This new line will cost $1.65 billion, and will probably take several years to complete. To put this in context, Canadian Utilities earned $73.5 million, or $0.59 a share, in the three months ended June 30, 2009....
TransCanada and Canadian Utilities are both working on major new projects. Despite the huge size of these undertakings, their overall risk is low. That’s because government regulators will let the companies pass along most of the costs to their customers in the form of higher rates. This should let both firms keep paying their current dividends, or raise them. ATCO owns a majority interest in Canadian Utilities, so it also stands to profit from these projects. As well, Finning should benefit by selling construction equipment and repair services to TransCanada and Canadian Utilities....
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $43 and ACO.Y [class II voting] $43; Shares outstanding: 57.9 million; Market cap: $2.5 billion; Price-to-sales ratio: 0.7; SI Rating: Above Average) is a Calgary-based holding company. ATCO’s main subsidiary is 52.3%-owned Canadian Utilities Ltd.. As a result of a recent reorganization, Canadian Utilities operates most of ATCO’s main utility and energy businesses....
PENGROWTH ENERGY TRUST, $10.28, Toronto symbol PGF.UN, fell 7% on Friday after it cut its monthly distribution by 30%, to $0.07 a unit from $0.10. The new annual rate of $0.84 yields 8.2%. Pengrowth wants to conserve cash to pay down its $1.4-billion long-term debt, which is equal to 50% of its $2.8-billion market cap. The distribution cut should save Pengrowth roughly $93 million a year. The trust also wants to spend more on developing its oil and natural-gas properties in western Canada. These have large, proven reserves, so there is little risk in investing in them. The extra cash will also help Pengrowth buy other nearby properties....
ATCO LTD. (Toronto symbols ACO.X (class I non-voting) $38 and ACO.Y (class II voting) $39; Income Portfolio, Utilities sector; Shares outstanding: 57.9 million; Market cap: $2.2 billion; Price-to-sales ratio: 0.7; SI Rating: Above Average) is a Calgary-based holding company. ATCO’s main subsidiary is 52.3%-owned Canadian Utilities Ltd.. This business distributes natural gas and electricity in Alberta. It also operates power plants in Canada, the U.K. and Australia. ATCO’s other businesses involve selling specialized services to other companies. These include building temporary structures, airfields and communication systems for resource and construction firms. It also offers billing and payment processing, natural-gas storage and travel services. The company’s revenue fell from $3.3 billion in 2004 to $2.9 billion in 2005, after Canadian Utilities sold its non-regulated retail operations, which supplied households with natural gas and electricity. But revenue rose steadily, returning to $3.3 billion in 2008. Earnings more than doubled, from $130.9 million, or $2.28 a share, in 2004 to $265.6 million, or $4.60 a share, in 2008....
Holding companies give investors the choice of buying the parent company or its publicly traded subsidiaries. In many cases, we like some subsidiaries but not others, so we prefer to invest in them directly and avoid the parent. Each situation is different, of course, and sometimes we recommend the parent over the subsidiaries. A good example is Maple Leaf Foods. Another is ATCO, the parent company of Canadian Utilities, which is a long-time recommendation of The Successful Investor. Like most holding companies, ATCO trades for less than the total value of its various pieces. This is known as a “holding-company discount.” Right now, you can buy a share of ATCO for $38, and get roughly $42 worth of Canadian Utilities. That means ATCO’s other businesses are essentially free....
CANADIAN UTILITIES LTD. (Toronto symbols CU (class A non-voting) $37 and CU.X (class B voting) $36; Income Portfolio, Utilities sector; Shares outstanding: 125.6 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.7; SI Rating: Above Average) earned $73.5 million, or $0.59 a share, in the three months ended June 30, 2009....
IESC-BFC, $14.49, symbol BIN on Toronto (Shares outstanding: 82.3 million; Market cap: $1.2 billion), changed its name from BFI Canada, effective June 1, 2009. That’s when BFI Canada amalgamated with its wholly owned subsidiary, IESI-BFC Ltd. The company will continue to operate as BFI Canada in Canada, and as IESI in the U.S. IESI-BFC is one of North America’s largest solid-waste management companies. However, its business does not include any management, collection or disposal of hazardous or liquid waste....