Forget bonds, buy these three instead

Article Excerpt

We continue to recommend income-seeking investors stick with high-quality utilities (like the three we review below) instead of bonds. That’s because the increasing likelihood of rising interest rates in the next few years would hurt bond prices. While utilities would also have to refinance their maturing debt at higher rates, regulators would probably let them pass along most of those costs to their customers. That helps protect their dividend payments. CANADIAN UTILITIES LTD. (class A non-voting) is a buy. The company (Toronto symbols CU [class A non-voting] $36 and CU.X [class B voting] $36; Income Portfolio, Utilities sector; Shares o/s: 273.2 million; Market cap: $9.8 billion; Price-to-sales ratio: 3.0; Dividend yield: 4.9%; TSINetwork Rating: Above Average; distributes electricity and natural gas in Alberta and Australia. It also owns or invests in 7 non-regulated power plants—1 in Canada, 2 in Mexico, 3 in Australia and 1 in Chile. ATCO (see below) owns 52.7% of the company. Due to COVID-19’s impact on oil…

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