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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I am thinking about switching from Alta-Gas to Innergex for a 3% position and taking a reduction in yield. 5 to 10 years holding time. The 2017 INE results were out late today. In looking them over I see significant improvement in revenues and adjusted EBITDA as well as a drop in the payout ratio due to an improvement in free cash flow. The dividend was increased modestly by 3%. However, earnings were down substantially.
Power generation was down due to lower flow volumes in BC and lower than average winds in France.
Would the anticipated rate increases be discounted in the current price in your opinion?
Do you think this is a reasonable switch at this time? Also, in your opinion is there anything in the 2017 results that would be a major red flag for you that I might be missing?
Thanks as always,
Rob
Read Answer Asked by Robert on February 22, 2018
Q: Hello, I'm curious about the ex dividend date provided by my investment company. Is that the date - if you own stock on that date - that you earn the dividend dollars? Could i for instance a company with a dividend day of Feb 20, buy 100,000.00 of it on Feb 18, get the dividend and then sell on Feb 22? Not really a strategy I have in mind but I'd love clarification on how it works. I have some stocks I want to sell, some for tax loss purposes and some because they've gotten so high and am looking at this ex dividend date as something to consider.
Many thanks.
Dave
Read Answer Asked by David on February 20, 2018
Q: Oaken has some very attractive GIC rates. I could possibly put in well over $100K.

With that in mind can Oaken be considered to be as safe as a RY or TD to meet both annual obligations and full repayment at the end of the term, be it 1, 3 or 5 years?

Thanks.

Read Answer Asked by Donald on February 20, 2018
Q: I'm getting the feeling some income stocks have been punished too heavily as the fear of interest rates increasing has chased investors away from companies that are well run and offer exceptional prospects for the future. I would like to buy some of these companies now that they have pulled back. Do you fell my thesis is correct, and, if so, please give me the names of your top 5 companies that you would suggest as strong value plays. Also, please accept my sincere thanks for your invaluable guidance.
Read Answer Asked by Les on February 19, 2018
Q: Good morning 5i,

Disclosure first: Sorry for another ENB, and also, I've owned ENB for 20 years now, and it's done me very well! However, I have been really thinking about the last several years, more importantly the coming years.

I read the Q&A daily, great service, and have a question about the ratios (P/E, P/CF, P/B, etc) you provide in answers to other ENB questions. Am I correct in assuming they are from Bloomberg ... What numbers / earnings would these be based on ... Adjusted? GAAP? DCF?

Also, from ENB's press release:
•Earnings of $207 million or $0.13 per common share for the fourth quarter and earnings of $2,529 million or $1.66 per common share for the full year, both including the impact of a number of unusual, non-recurring or non-operating factors.

The "number of unusual, non-recurring or non-operating factors."
I'm pretty sure I remember these exact same words in an Enron press release.

From Globe Investor:
Enbridge said it took a $4.55-billion charge in the latest quarter to write down assets in the gas transmission and midstream business.

I can't find 'What' assets, worth $4.55B that they wrote down with no apparent explanation. Hopefully, I'm not looking hard enough.
Did 5i see anything that further explains this?
(for comparison, the Line 3 replacement is $5.3B, so $4.55B must be substantial)

As mentioned, I read this forum daily, and do know that while you endorse the company, you also state it is not without some risk.
(both TRP(~20 yrs ago) and KMI have cut their dividends before)

Appreciate your answer to the ratios question, and comments on the write downs.
Thank you, I do enjoy the service, and have a great weekend.

Rod

(deduct accordingly)
Read Answer Asked by Rod on February 19, 2018
Q: This is not a question, but rather a comment on your statement that ALA.r distributions are mostly income for tax purposes. That is incorrect. It is mostly ROC. ALA put out a link to the month-by-month income vs ROC for distributions in 2017 here:
https://www.altagas.ca/sites/default/files/2018-02/Subscription%20Receipts%20Taxation%20Information.pdf

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RE:
Asked by Rajiv on February 14, 2018
5I RESEARCH ANSWER:
Utility and income stocks are not having a good year at all, on fears of higher interest rates. ALA is down 9% YTD. But we have no particular worries on the company itself and do not see the dividend at risk. As 'part' of a portfolio designed to generate income, we would be comfortable with it. Note the receipts pay interest income (for tax purposes).
Read Answer Asked by arnold on February 17, 2018
Q: With just about every car manufacturer bringing out electric cars in the near future, how is the increase in electricity going to be produced? In Alberta 45% of their energy is produced by coal; 10% of energy in Canada is produced by coal and it is around 40% for the US. Hydro and nuclear plants are very expensive and time consuming to build; and getting new ones built are extremely difficult. Are any of these existing plants under utilized? Wind or solar power - I don't think so. So, does that leave fossil fuels to take up the increased demand? If that is correct, which existing energy companies would you think are best positioned?
Read Answer Asked by stephen on February 16, 2018
Q: Regarding utilities falling prices, you have answered in a couple times in the Q&A: "The main issue is that US tax reform is going to reduce earnings due to lower tax recoveries." Can you expand on this? What is the percentage of reduction? I looked for an article and couldn't find one explaining this. I am looking to add to AQN, FTS and BEP.UN for their growing yield, but I can't determine a fair price or if they're under/over valued because of the US tax reform and am hoping you can help me make my decision. Thanks
Read Answer Asked by Curtis on February 16, 2018
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