Utility stocks are shares in companies that provide electric power, telecommunications and pipeline services. At TSI Network, we continue to recommend that income-seeking investors buy high-quality utility stocks instead of bonds. Utility shares have always been great sources of tax-advantaged dividend income.
While most utility stocks are steady income producers, some utilities also offer opportunities for growth. This happens mostly when utilities want to expand into new markets or geographic regions.
When looking for investments in utility sectors, investors should avoid judging a company based solely on its dividend yield. That’s because a high yield can sometimes be a danger sign rather than a bargain. For example, a company’s dividend yield could be high simply because its share price has dropped sharply (because you use a company’s share price to calculate yield). That can be a sign of an imminent dividend cut.
Apart from a good dividend yield, the utility stocks you invest in should have a long history of paying (and raising) their dividends. For a true measure of stability, focus on those companies that have maintained or raised their dividends during economic and stock-market downturns.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
Hold some defensive stock investments in your portfolio—but don’t overdo it
You will improve your chances of making money over long periods, no matter what happens in the market, if you diversify your holdings across most if not all of the five main economic sectors: Manufacturing… Read More
PLEASE NOTE: This is our last Hotline for 2016. Our next Hotline will go out on Friday, January 6, 2017.
BLACKBERRY LTD., $9.51, Toronto symbol BB, has started to benefit from its plan to cut its reliance on smartphones and focus on producing and selling… Read More
It’s hard to make money from seasonal trends like the summer market doldrums
If you’ve been investing for a number of years, you’ve probably heard of the “summer market doldrums”. Some investors take this to refer to the sluggish periods that the market goes through every… Read More
TRANSCANADA CORP. $50 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 702.3 million; Market cap: $35.1 billion; Priceto- sales ratio: 3.1; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.transcanada.com) operates a 67,300- kilometre pipeline network that pumps natural gas from Alberta… Read More
TransCanada recently had to write off its investment in its Keystone XL oil pipeline project after the U.S. government rejected the plan. Political pressure in Canada could also force it to cancel its huge Energy East pipeline.
Despite these setbacks, TransCanada’s future looks bright. The… Read More
Here’s the text of the quarterly letter I recently sent to our Portfolio Management clients:
“Most investors find they improve their investment results when they invest conservatively. Speculating can pay off from time to time. But the gains are generally too small and/or… Read More
Innergex Renewable Energy, $11.03, symbol INE on Toronto (Shares outstanding: 100.9 million; Market cap: $1.1 billion; www.innergex.com), is a recommendation of our Canadian Wealth Advisor newsletter.
We place Innergex in the Utilities sector, a broad area that includes telecoms, pipelines, power generators and so on.
The company… Read More
Enbridge has jumped 175% in the past five years, largely because low interest rates have prompted income-seeking investors to buy high-yielding utility stocks. The company is also aggressively adding pipelines to profit from rising oil sands production and new fields like the Bakken shale oil… Read More
Every Monday we now feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time.
DUNDEE CORP. (Toronto symbol DC.A; www.dundeecorp.com)… Read More
We haven’t been able to find any water utilities we would recommend for investment.
The water business in developed countries is subject to a lot of regulatory hurdles and has limited growth prospects. There may be opportunities in developing nations, many of which desperately need… Read More
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