Warning… Look At This ONE Thing Before Investing!
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We’ve talked about utility stock dividends before… and as you probably know, dividends in the industry are strong.
But as we’ve pointed out before…. not all dividend stocks… or utility stocks for that matter, are great investments.
Want proof?
Keep reading.
I’ll give you one big warning sign to look for and give you the name of a great Canadian dividend stock you should consider scooping up.
The One Thing To Look At With Dividend Stocks…
Not all dividend stocks are created the same.
But it’s not hard to find the cream of the crop. The first thing you need to do is simply look at the history of the dividend payments.
That’s right… start with the end in mind. What you find may surprise… and even shock you!
You still need to do all the other research eventually, but by looking at the dividend payout, you’ll learn a lot… like is the company steady as a rock? Or does management play games with their dividend payout?
Want to know if the company is struggling… or has struggled in the past?
Just look at the dividend payout and look for missing payments or dips in total payout.
Things have to get pretty bad at a company for management to cut the dividend. If you see a company that has cut the dividend in the past, it’s a red flag, and something you want to fully understand before jumping into that investment.
How To Make Smart Decisions On Utility Stocks
Like I said, start with the dividend… then look at the business, completion, financials, management and valuations… it’s the same process you would use for any stock investment.
Now here’s a surprising observation…
Despite their reputation as a safe harbor for investors, not one utility stock is a member of the S&P 500 Dividend Aristocrats.
And as you study the history, keep an eye on the future. Beware of utility companies that are in markets where there’s limited population growth or face looming expenses for facility upgrades.
Looking For Top Performing Canadian Utility Stocks?
Want to look for a great utility stock… take a look north of the border. Head for Water Street in Saint John’s, the historic capitol of Newfoundland.
It’s one of the oldest streets in North America, crammed with pubs and boutiques. And at 139 Water Street, a block from the harbor, you’ll find the corporate headquarters of a company that has been paying growing dividends longer than any other company in Canada.
This is where you’ll find Fortis Inc. (FTS-T), Canada’s largest privately held utility. The firm has been raising its dividends every year for the past 42 years: no other Canadian stock has matched this performance.
The company serves 2.4 million customers, has $18 billion in assets, and for decades, Fortis has been a darling of Canadian dividend investors. The firm’s 10-year cumulative total return outperforms its industry sector.
Even when its revenues have fallen, the dividend has been paid. And it’s not often revenues fail to grow. The last time revenues sagged was in 2011. That’s when the government of Belize seized and nationalized Fortis’ assets.
Fortis generates annual revenues of more than $1.4 billion and operates in provinces across Canada, in Australia, and in the British West Indies.
Southern Exposure For A Northern Utility
Fortis also owns utilities in New York and Arizona. 12% of the firm’s assets are in American gas and electric operations.
This expansion is a reminder of how well positioned Canadian utilities are to address growing U.S. energy shortages by exporting power.
Fortis is not just acquiring U.S. assets. It is watching closely as Canada’s electricity exports to the U.S. are poised to grow.
Fortis is positioned to compete alongside Canada’s big public utilities to meet this growing U.S. demand. It knows the market. It has the capital. It is willing to take on publicly owned competitors.
Fortis, and a handful of other private utilities in Canada that pay dividends and are traded on the Toronto Stock Exchange, are well aware of America’s regional struggles to generate enough electricity.
In fact, exporting electricity to the U.S. is already a big business in Canada.
More than $4 billion of electricity flows south from Canada’s utilities every year.
There you have it… where to start your research on dividend stocks, and one great way to capture fat Canadian utility dividend yields!
Category: Dividend Yield
