canadian utilities

EMERA INC., $48.80, Toronto symbol EMA, is a buy.

The company owns 100% of Nova Scotia Power, that province’s main electricity supplier. It also owns 100% of Teco Energy, which supplies electricity and natural gas to 1.3 million customers in Tampa Bay, Florida....

High interest rates tend to increase the appeal of bonds and hurt the shares of high-quality utility stocks, including the four we analyze below. We feel they are particularly attractive buys right now as it looks like the Bank of Canada will cut interest rates later this year.


FORTIS INC....

CANADIAN TIRE CORP., $148.00, Toronto symbol CTC.A, is a top pick for 2024.

Investors benefit from the company’s 502 Canadian Tire stores. They sell automotive parts and services, and household and sporting goods; franchisees run most of the locations....

TC ENERGY INC., $52.08, Toronto symbol TRP, remains a buy.

TC generates steady cash flow for investors mainly through a 93,700-kilometre pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. Its other operations include 4,900 kilometres of crude oil pipelines and nine power plants.

The company continues to make progress with its plan to build a new pumped storage hydro power project near Meaford, Ontario....

Utilities stocks fell in 2023 on strong and competing demand for bonds as interest rates spurred bond yields. Higher interest rates also increased the borrowing costs for utilities as they undertook new projects and upgrades.


However, it now looks like interest rates will come down in the next few months....

ATCO LTD. (class I non-voting) is a buy. The company (Toronto symbols ACO.X [class I non-voting] $38 and ACO.Y [class II voting] $38; Income Portfolio, Utilities sector; Shares outstanding: 113.4 million; Market cap: $4.3 billion; Price-to sales ratio: 0.9; Dividend yield: 5.0%; TSINetwork Rating: Above Average; www.atco.com) gets 80% of its revenue from its stake in Canadian Utilities Ltd....

The shares of these two utilities have suffered in 2023 as higher interest prompted investors to shift into bonds. It now looks like rates will fall in 2024, which should lift their share prices. Meantime, their high-quality assets will continue to let them keep raising their dividends.


CANADIAN UTILITIES LTD....

CANADIAN TIRE CORP., $144.81, Toronto symbol CTC.A, is a buy.

Investors benefit from the company’s 503 Canadian Tire stores. They sell automotive parts and services, and household and sporting goods; franchisees run most of the locations....

Rising interest rates continue to weigh on the stock prices of Canadian Utilities LTD. and its parent firm ATCO. That’s because investors can now earn comparable yields from bonds with less risk. However, they pay more tax on interest income than dividends. As well, it’s possible that interest rates will decline in 2024, which should spur these high-quality utilities.


CANADIAN UTILITIES LTD....

FINNING INTERNATIONAL INC., $36.86, Toronto symbol FTT, is a buy.

The company sells and services Caterpillar-brand heavy equipment in Western Canada, South America and the U.K.

With the June 2023 payment, Finning raised your quarterly dividend by 5.9%, to $0.25 a share from $0.236....