Investment Q&A

Q: Peter; How big a deal is the announcement this am re dry wells- big sell off - would you add to a position? Thanks. Rod

Q: Its been a busy earnins seasons.
A few dividend increases you missed on your wonderful dividend change site
GRT.UN Nov 9th 3.20% increase
AD.UN Nov 9th 3.00% increase
CTC,A Nov 10th .6.25% increase
DIV Nov 14th 2.10% increase
Thanks a bunch

Q: The only energy holding I have currently is SU at 5% of my total portfolio. Given conflicting economic predictions for the next 12-18 months, would you suggest I increase my energy holdings or stand pat? If increase, by what % and could you provide 2 or 3 names with some growth and dividends >2%? Thank you.

Q: Hi Peter, Ryan, and Team,

Your last answer to a 5i member (Peter) regarding the sustainability of AQN’s dividend is more positive than David Berman’s piece in today’s Globe & Mail.

In light of his article, where he repeated a comment by a Scotiabank analyst: “We have taken all dividend growth out of our model and, even still, the payout ratio remains 103 per cent of earnings per share in 2023 and 97 per cent in 2024,” Robert Hope, an analyst at Bank of Nova Scotia, said in a note.

Algonquin’s management said last week that it was targeting a dividend payout ratio of 80 per cent to 90 per cent, meaning that the company expects to distribute no more than 90 per cent of its profits as dividends over the longer term.

“This payout ratio target would be above its peers and, in general, makes growing the business without external equity more difficult. If the company does pursue a full reset, we could see a reduction in the dividend,” Mr. Hope said.

Is 5i still of the opinion that the dividend won’t be cut? My feeling is that if in fact the dividend is cut, the stock will decline even further, and as always, welcome your thoughts.

Q: Sold half my position in VET in the mid $33 back in summer and I wish I would have sold the whole part. Looked at VET's Q3 report and it seems that it is the threat of a European "excess profit tax" that has pummeled the stock lately and I understand why and think the sell down is warranted. But the way I understand it there could be a unseen upside in VET in Q1 of 2023 when the VET's purchase of Shell's portion of the Corrib gas plant is completed. According to VET all of the 2022 Cash flow from Corrib should go to VET. When that cash flow is added to VET's income statement could they restate their 2022 earnings to the upside? I am not sure how this works but it seems to me that there is some 'hidden' earnings in VET that can not be realized until the sale of Shell's position to VET is officially completed. One thing we know is that Corrib definitely made money in 2022. Could the increased earnings from Corrib be enough to counter the Euroean excess profit tax. Long question and I hope you understand what I am trying to get at.

Q: I wish to add more energy stocks to my portfolio for diversification. I have ENB and SU. I am thinking of adding GXE, PXT & TOU, all three seem to have very low or no debt, and either PPL or TRP. All for a 5-year hold. I do enjoy the high dividend yield but would still wish to have some growth and safety. Please feel free to add or remove any from my list of your choice, rank them from the best to the least, and each with a reasonable entry price. How long of a time frame would you recommend to spread over the additions?

Thank you again for your insight.
Roger

Q: Do you see any danger of AQN becoming insolvent?
With appreciation,
Ed

Q: Hi 5i,

I currently own the above noted renewable energy utilities. I am thinking of selling AQN. If I did so, (and I would like to keep it in renewables) would you recommend putting the proceeds towards one of the above or something like NPI or possibly a renewable energy ETF. Could you recommend 1 to 3 ETFs?

Thanks!!

Q: does AQN make an attractive take-over candidate at current prices or marginally lower prices...would look to harvest tax loss but trying to assess risks of that strategy...would it be more attractive to a US peer vs. Can...many thanks...cheers

Q: Thoughts on this company's metrics if one's portfolio is low in consumer staples. Buy, sell, or hold? If you don't like which consumer staples companies in the US are better and is it a bad time to add knowing they have done well in a bad market. Thinking people may sell and rotate into tech. Thank you!

Q: Hi 5i Team

Pretty disappointing day for AQN investors. Three questions:

1) Do you think they will need to do an equity raise in 2023 relating to the Kentucky Power acquisition? Initially, they're planning to cover it through existing borrowings (at floating rates) but management indicated on the CC that is expected to be short term.

2) Do you have any info on the actual NAV of their assets (thinking of this like a REIT)? If not, any suggestions where to look / how to calc?

3) Given the importance of dividends to investors (current and future), what will likely be the catalyst for cutting it and how long do you think they will hold the line before deciding it's necessary?

Thanks
Peter

Q: I have a question about 956
Good Morning. I think it’s time to sell Algonquin ( albeit about 6 months late) I was initially going to ask for a proxy but now with its prospects doubt I ever buy it back. With a long time frame and no restrictions on sector/ risk etc can you suggest 2 high conviction names please.
Thank you

Q: I'm looking to boost yield while keeping a position in CDN oils (Diversified Rif account). I am up on CNQ and am thinking of a switch to GXE. Acknowledging the difference in mkt cap, are there other material risks of this switch. Wondering if Gears high yield is a warning sign

Q: Good morning all at 5i!!

I hold both having just purchased capital power a little while ago. I have held Algonquin for a long time. Should I sell Algonquin shares and buy more Capital power, or keep both since they are held in different portfolios???
Cheers,
Not liking the snow.. Tamara

Q: I note that the dividend rate is pretty high for this company, do you believe it's sustainable? Or would you suggest an alternative?

Q: Hi,
Having a position in AQN that is now underwater, I am wondering about selling it as well as two bank holdings that have a total profit equal to AQN's loss with the idea that I can use the proceeds to purchase another bank stock or two, top up ENB holdings, or something else you might recommend. All three holdings are in taxable accounts. Open to suggestions, as I have the sense that waiting to see how AQN does from here appears to be more risky than moving on. Your thoughts on this idea would be most appreciated!

Dawn

Q: Do you feel both these utilities are in oversold condition based on your review of their latest quarterly results?

Q: What is your opinion about the sustainability of the dividend with AQN? With the recent price fall and financials and their outlook, it looks pretty shaky...

Q: Do you think there is a realistic chance of a dividend cut at this point? If so, where would you place the odds?

Q: Could you please comment on FRU's Third Quarter results and your expectations for the stock over the next 12 months considering these results, the company's guidance, production growth and your assessment of oil and gas prices over this period. I currently own shares in the company. Would you continue to hold the shares or perhaps, add to the position?