Regulated assets support their dividends

Article Excerpt

Rising interest rates are generally bad news for utility stocks, as they increase their borrowing costs at the same time they make bonds more attractive to investors who might otherwise invest in utilities. However, steady cash flows from Canadian Utilities’ regulated businesses will let it and parent company ATCO keep raising your dividends. CANADIAN UTILITIES LTD. is a buy. The company (Toronto symbols CU [class A non-voting] $37 and CU.X [class B voting] $37; Income-Growth Portfolio, Utilities sector; Shares outstanding: 269.5 million; Market cap: $10.0 billion; Dividend yield: 4.8%; Dividend Sustainability Rating: Highest; 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 below) owns 53.0% of the company. Canadian Utilities raised your quarterly dividend by 1.0% in March 2022, to $0.4442 a share from $0.4398. The new annual rate of $1.78 yields a high 4.8%. The company has now increased its…

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