Q: I own stock in EMA. As you know it has been underperforming for the past few years. Would it be a wise move to sell EMA and put the money into Hydro One. I would appreciate your thoughts and the pros and cons of such a move. Thanks
5i Research Answer:
H is more expensive on valuation, and has a lower dividend yield currently. But, it has a better 5-year dividend growth rates and is outperforming EMA in terms of stock performance. H is also about twice the size of EMA which implies some more safety. We like both for income. We like the momentum better of H and its growth, but an investor is paying up for this in valuation. We would be OK owning both, but if only one is to be owned we still might side with H. We would be far less inclined to switch if taxes apply to an EMA sale.