High-quality utilities still top bonds

Article Excerpt

We prefer top-quality utility stocks over bonds, mainly due to the favourable tax treatment of dividends compared to interest payments. We like both Canadian Utilities and ATCO, which both offer dependable dividends. ATCO’s holding company discount also enhances its appeal. CANADIAN UTILITIES LTD. (class A non-voting) is a buy. The company (Toronto symbols CU [class A non-voting] $39 and CU.X [class B voting] $39; Income Portfolio, Utilities sector; Shares outstanding: 269.9 million; Market cap: $10.5 billion; Price-to-sales ratio: 2.6; Dividend yield: 4.6%; TSINetwork Rating: Above Average; www.canadianutilities.com) 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 right) owns 52.9% of the company. Revenue for the quarter ended December 31, 2022, rose 7.7%, to $1.11 billion from $1.03 billion a year earlier. The gain was due to the collection of deferred revenue from 2021 as well as higher revenues from electricity and natural gas distribution…