Bad News is Good News for Dividend Growers

As mentioned in an earlier post, I subscribe to Tom Connolly's website on dividend growth. It is only $50 a year and well worth the research and explanations he provides on a long term dividend growth stategy.

In one of his latest posts he highlights how he has never seen the dividend yields higher on 4 specific utility stocks. Let's go through them and see if they are a good buy right here for your own portfolio.

Fortis FTS.TO

Closed at $42.24 on 23 Feb 2017

52 week high/low $39.38-$48.73

Currently trading at a 12% discount to it's 52 week high

Dividend Yield - 4%

The Company

"Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean. It generates, transmits, and distributes electricity to approximately 422,000 retail customers in southeastern Arizona; and 96,000 retail customers in Arizona's Mohave and Santa Cruz counties with an aggregate capacity of 2,834 megawatts (MW), including 64 MW of solar capacity. The company also sells wholesale electricity to other entities in the western United States; owns gas-fired and hydroelectric generating capacity totaling 64 MW; and distributes natural gas to approximately 1,008,000 customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 556,000 customers in southern and central Alberta; owns four hydroelectric generating facilities with a combined capacity of 225 MW; and provides operation, maintenance, and management services to hydroelectric generating facilities. Further, the company distributes electricity in the island portion of Newfoundland and Labrador serving approximately 266,000 customers with an installed generating capacity of 139 MW; and on Prince Edward Island serving approximately 80,000 customers through generating facilities with a combined capacity of 145 MW. Additionally, it provides integrated electric utility service to approximately 66,000 customers in Ontario; approximately 44,000 customers on Grand Cayman, Cayman Islands; and approximately 15,000 customers on certain islands in Turks and Caicos, as well as holds long-term contracted generation assets in British Columbia and Belize, and the Aitken Creek natural gas storage facility. It also owns and operates transmission and distribution lines; and natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John's, Canada."

As you can see from the chart the price has been heading down. This has resulted in a rise in the yield to 3.8%. IMO there has never been a better time to buy FTS for a dividend growth portfolio.

Emera EMA.TO

Closed at $41.91 on 23 Feb 2017

52 week high/low $39.08-$48.73

Currently trading at a 15% discount to it's 52 week high

Dividend Yield - 5.4%

The Company

"Emera Incorporated, an energy and services company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity to various customers. The company is also involved in gas transmission and utility energy services businesses; and the provision of energy marketing, trading, and other energy asset management services. In addition, it transports re-gasified liquefied natural gas to consumers in the northeastern United States through its 145-kilometre pipeline in New Brunswick. The company serves approximately 375,000 customers in Florida; 525,000 customers in New Mexico; 515,000 customers in Nova Scotia; 158,000 customers in the state of Maine; and 129,000 customers in the Island of Barbados. Emera Incorporated was founded in 1919 and is headquartered in Halifax, Canada."

Another utility blue chip stock dive bombing down to test it's lows, at the same time the yield has been steadily rising as the cost of buying gets a lot cheaper. Pay less and get more yield. This is panacea to a retired income investor. I've been buying EMA steadily over the last month for the long term. 

Canadian Utilities CU.TO

Closed at $33.56 on 23 Feb 2017

52 week high/low $33.37-$42.44

Currently trading near it's 52 week low

Dividend Yield - 4.7%

The Company

"Canadian Utilities Limited engages in the electricity, and pipelines and liquids businesses. It operates through Electricity, Pipelines & Liquids, and Corporate & Other segments. The Electricity segment engages in the generation, transmission, and distribution of electricity using coal, natural gas, hydroelectric, and wind resources, as well as related infrastructure development in Western Canada, Ontario, the Yukon, the Northwest Territories, and Australia. The Pipelines & Liquids segment is involved in the integrated natural gas transmission and distribution; energy storage; and related infrastructure development activities, as well as provision of industrial water solutions in Alberta, the Lloydminster area of Saskatchewan, Western Australia, and Mexico. It owns and operates approximately 9,400 kilometers of natural gas pipelines, 18 compressor sites, approximately 4,000 receipt and delivery points, and a salt cavern storage peaking facility located near Fort Saskatchewan, Alberta in Canada. The Corporate & Other segment engages in commercial real estate; and retail energy and natural gas businesses, as well as provides billing, payment processing, credit collection, and call center services. The company was incorporated in 1927 and is headquartered in Calgary, Canada. Canadian Utilities Limited operates as a subsidiary of ATCO Ltd."

"If you want to buy stocks, why would you want the price to rise" - Warren Buffett

Tom Connolly goes on to further state that you should just ignore what the market is saying. Good quality names are being treated as lemons. Yields have never been higher in decades on some of these names.

In the case of Emera he asks; "How can you beat a 5.7% yield combined with a 9% dividend growth record. Well, it's pretty hard to find that outside the safety of a quality utility that's almost a hundred years old. 

Use this time of cheap prices to add to your dividend growth portfolio and watch your yields and money explode upward.

Do you own any utility stocks and would you be buying them here? 

Related Reading: Rising Rates and Dividends

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