Look beyond their latest quarterly results

Article Excerpt

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. That gives them predictable cash flows for upgrades, new investments and regular dividend increases. CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $32 and CU.X [class B voting] $32; Income Portfolio, Utilities sector; Shares outstanding: 272.1 million; Market cap: $8.7 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.9%; TSINetwork Rating: Above Average; www.canadianutilities.com) distributes electricity and natural gas in Alberta and Australia. It also holds all or part of 19 power plants—15 in Canada, 2 in Australia and 2 in Mexico. Regulated operations supply 99% of its earnings. ATCO Ltd. (see right) owns 52.4% of the company. In December 2017, Canadian Utilities transferred its 24.5% stake in ATCO Structures & Logistics to the parent company…

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