Canadian Dividend Investing: Utility Stocks

Utility stocks are great because you can feel good while you are paying for your monthly expenses because you know that it won’t hurt so bad when you pay your bills.  Solely because when you pay your bills you are somehow paying yourself in a weird convoluted way.

Investing in dividend paying companies is considered a relatively low risk way of investing in the stock market because when you invest in dividend paying companies (rather than growth companies), other investors want to buy in as well because of increasing dividends.  Therefore this, in a nutshell, makes the investment a little less risky.

Now, that being said, there are some utility type stocks that aren’t so stable.  Namely the one that I hold myself, Just Energy (TSE: JE).  Although the dividend yield is pretty awesome (it was about 7-9% when I bought it) this stock has tanked quite a bit.  Now the dividend yield is even juicer at over 12% but of course it comes with risk.

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Canadian Dividend Investing: Utility StocksNow, please take this discussion or blog post with a grain of salt.  I by no means am an investing guru, so consider at your own risk.    This is meant for discussion purposes and to spark some talk about utility companies.

Here are a few utility stocks that I am a big fan of that you might want to consider.

Canadian Utilties (TSE: CU)

Canadian Utilities Company is a holding company that has a few segments as part of its business.  From Google Finance, these include “the regulated distribution of natural gas by ATCO Gas, , and the regulated distribution and transmission of electricity by ATCO Electric and its subsidiaries, Northland Utilities, Northland Utilities and Yukon Electrical; Energy includes the non-regulated supply of electricity and cogeneration steam by ATCO Power, and the non-regulated natural gas gathering, processing, storage, and natural gas liquids extraction by ATCO Midstream”.

The current price May 2013 is $77.64 and the annual dividend yield is 2.50%.  The dividend payout is quarterly, at 48.5 cents per share which was recently increased last year from 44.25 cents per share in the middle of last year.  The P/E ratio is 19.28.Earlier this month, Canadian Utilities announced that they will be doing a two for one share split in June 2013.

Fortis (TSE: FTS)

I currently own Fortis (though only about 100 shares of it) and it was one of my first ever dividend purchases so I will always have a soft spot for it in my heart.  I think I bought it in 2009 at around $24 or so.  As of May 2013, the current price is $33.68 and the annual dividend yield is 3.68%.  They have been great because they have consistently raised their dividends which of course, makes investors very happy.  The P/E ratio is 20.20.  The currently quarterly dividend is 31 cents per share, which was increased from 30 cents per share in 2012.

They are a natural gas company that services over 2,000,000 customers all across the country.  When I pay my natural gas bill I don’t really mind since I am getting paid in dividends lol!

Transalta (TSE: TA)

Transalta is a business that is involved in the production and sale of electric energy.  I am currently planning to buy in on Transalta but am waiting for the price to drop a little before I buy.  I am planning to add it to my Tax Free Savings Account portfolio.  They haven’t been doing that well lately.  Currently, the price for Transalta is $15.55.  The annual dividend yield is a bit too juicy at 7.46%.  The quarterly dividend distribution is at 28.99 cents.  The last time they ever increased their dividend was in Feb 2009, which isn’t that great obviously.

If you want more ideas, the Globe and Mail has a great article on 14 dividend paying Canadian utilities stocks that can power your portfolio (gotta love those puns).

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There are plenty others, like Emera, or Algonquin Power to consider. In fact, some people consider Telecom companies (like Bell, Telus, Rogers) to be similar to utility companies since people are paying into their cell phone plans on a monthly basis.  That might be another option to consider.

Readers, do you have any favourite Canadian dividend paying utility stocks?

About

Young is a writer and former owner of Young and Thrifty and the main "twitter' behind Young and Thrifty's twitter account. She lives in Vancouver, BC and enjoys long walks on the beach, spending time with her anxious dog, and finding good deals. If you like what you read, consider signing up for email updates.

One Response to Canadian Dividend Investing: Utility Stocks

  1. I like Fortis and Emera, and I’d like to add Canadian Utilities at some point. Maybe even ATCO Gas.

    I’d stay far, far away from Transalta. From what I’ve heard, the company is poorly managed and the future prospects don’t look good. I’m surprised the dividend hasn’t been cut yet.

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