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1/30/24 Capitalist Times Live Chat
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Alex M
5:57
Hi Roger.  What are your thoughts on ATCO Ltd (ACLLF)?  Is it a good utility play, or are you concerned about the diversified businesses outside the utility space?  Thanks.
AvatarRoger Conrad
5:57
Hi Alex. I don't track ATCO per se in CUI but its utility arm Canadian Utilities (TSX: CU, OTC: CDUAF). I rate it a hold. The company is transmission and distribution, just as the rest of ATCO is infrastructure. Actual electricity generation in Alberta--its main area of operations--is owned by other companies such as TransAlta Corp (TSX: TA, NYSE: TAC). I had Canadian Utilities as a hold late last year because of price. Now that it's come down a bit, I'll be reassessing when they announce Q4 earnings and update guidance, which is expected in early March.
Alex M
5:59
Do either of you gentlemen have a preferred online broker?  Both Schwab and Fidelity have been troublesome lately (website issues, inability to execute trades, odd error messages, etc.), so I'm wondering if you've got a platform that you like.  Thank you.
AvatarRoger Conrad
5:59
I would give interactivebrokers.com a try. They have a great platform and have a policy of trying to do things to increase investors' flexibility and options rather than restrict them, as so many now appear to be doing. And they're very competitive on fees as well.
Alex M
6:03
Hi Roger.  It looks like BKH finally got around to raising its dividend again, but now the forecasted payout ratio is outside of their target range.  Do you still like this stock, or has the story changed a bit?  Still a buy?  Thanks.
AvatarRoger Conrad
6:03
I'm encouraged by the dividend boost, which at 2.5 cents a quarter is only slightly less than the 3 cent for the previous year. I'm still very interested in what they'll be saying on Feb 7 when they report Q4 numbers and update guidance. And Fitch just changed the company credit outlook to negative from stable, very likely in reaction to management's decision to raise the payout rather than apply all available cash to cutting debt. But I think this stock may have bottomed. And while the wildfire discount is likely to endure this year, that still leaves room for a solid return this year.
Alex M
6:11
Hi Roger.  Regarding UGI, the CEO made some comments regarding the dividend on the last call (Nov 17, 2023):  

"... our targeted cash deployment plan for fiscal 2024 and how it aligns with the priorities that we've shared with you. First, and of the utmost importance is meeting our commitment to the dividend as we return cash to shareholders. Similar to fiscal 2023, we expect to maintain an attractive payout ratio as we anticipate returning roughly $330 million of capital to shareholders."

I know you've got some concerns about UGI's dividend sustainability as they conduct their strategic review, so I was hoping you could provide your thoughts on this commentary.  Thanks.
AvatarRoger Conrad
6:11
I think it's actually pretty vague wording. Notice they said "commitment to the dividend" rather than "commitment to the current level of dividend," for example. They've basically committed to paying a competitive dividend. The big issue here is what UGI eventually decides to sell as part of the strategic review. Obviously, if they sell or spin off AmeriGas, they'll have a very hard time paying the dividend at the current rate. If it's just the European fuels operations they sell--which have been very volatile--there's less direct impact on cash flow available for distribution, but also likely to be less direct positive impact on the balance sheet than selling AmeriGas. And "balance sheet repair" has been stated as the goal of the review. In any case, I think there's enough uncertainty here to be very cautious. And arguably, a small dividend cut is already priced in.
AvatarRoger Conrad
6:16
Well that looks like all we have for today. Thanks once again to everyone who participated today, whether live or via emailed questions. We received a lot of food for thought today--and some good ideas for future posts. I hope everyone in this chat has by now subscribed to our substack.com publications. If not, I'd like to extend the invitation again now.
6:17
Once again, we will be sending everyone a link to a transcript of the complete Q&A tomorrow morning. And we'll also post it on the website. If for some reason we did not answer your questions fully, please feel free to write us at service@capitalisttimes.com and we'll get back to you as soon as we can.
6:19
As a parting note, over the next few weeks we're going to be going through quite a few earnings and guidance updates. We will send an alert if anything happens that requires an immediate response. But feel free to write in if there's any question about the advice.
Thomas
6:19
Thanks to both of you. Great session.
AvatarRoger Conrad
6:19
Thank you for joining us! We appreciate it. And on that note, we'll look forward to hosting again next month. Take care everyone.
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