Algonquin Power & Utilities Corp (AQN.TO)

He has to lump them with the whole power and utilities sector. They are trading at large multiples to their earnings. These are high capital intensive businesses. He sees them as moderate risk due to the possibility of interest rates rising. They have stable businesses and you get to charge a regular ROE on the power over time.

He thinks it has had its run. He is selling down because it is now just purely a dividend story.

Buy more Algonquin Power (AQN-T) or buy BMO Equal Weight Utilities Index (ZUT-T)? ZUT gives you more diversification so he would unload Algonquin Power and buy ZUT. This will take the risk out of the equation.

About 99% of the people owning this own it for yield. If you can get a little capital appreciation out of it, that is a good thing too. Pretty expensive. About 4% yield. Be ready to climb off the bus if you see yields on bonds start to go up.

(A Top Pick Feb 16/12. Up 28.09%.) Sees it going up to $8.50. Has a very good development pipeline and a very good payout ratio. Management has done a good job of growing the company.

Was concerned about this a couple of years ago when the US housing market tanked. One of their growth areas was in Arizona. Recently people have started to realize that this is a pretty solid outfit. Good diversification of assets being in Hydro and specialty power production. Good safe stock to be in. Feels the 4.14% dividend is quite safe.

(A Top Pick Feb 16/12. Up 12.02%.)

Power business married with a utility business. Probably worth $7 and he would probably nibble away in the low $6’s. Some of their acquisitions have exposed them to a little bit of the merchant power sector, meaning their generation isn’t fully contracted for the long-term but doesn’t think this will be a significant component of cash flow going forward.