Monday, June 8, 2015

Recent Buy: Canadian Utilities Ltd

As a long-term investor, the slump in the Canadian markets of late has made the smile on face a few inches wider. Companies that have been on my watch list for years are finally starting to reach reasonable prices as short-term traders drive the market down with their worries about a Greek default, rising interest rates in the US, the permanently low price of oil…and any other issues used as justifications when markets move.  Instead of freaking out, I’ll keep calmly buying shares in great companies that have a history of raising their dividends over time.

Coincidently, over the last three weeks, I established two-thirds of a position in Canadian Utilities Ltd. What attracted me to this company? Glad you asked!
-          A history of raising its dividends yearly since 1972
-          An attractive entry yield of 3.3%
-          A dividend raise earlier this year of 10.3%
-          An attractive entry point with P/E(trailing) of 15.4X and the stock trading at a 52-week-low
-          A strong balance sheet (A/Stable rated) and a relatively low payout ratio of less than 60%
-          The consistent cash flows generated by the majority of its sales in regulated industries.

It’s not often that great businesses go on sale, so I felt obligated to stock up.  This means there’s almost no chance I’ll be able to complete my portfolio transformation by the end of June (Q2), but I should still have it wrapped up come September (Q3). Here’s hoping the market continues to plunge so that I can pick up more shares of great companies on the cheap.  

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