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12/30/24 Capitalist Times Live Chat
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AvatarRoger Conrad
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Hello everyone and welcome to our final live webchat for calendar year 2024! We appreciate your participation and look to a lively and informative session.
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As always, there is no audio. Just type in your questions and we'll get to them as soon as we can comprehensively and concisely. We'll be sending you a link to the transcript of the complete Q&A tomorrow. Now let's get started with some answers to questions we received by email prior to the chat.
Q. Roger. It appears that Trudeau is in real trouble politically in Canada. If he’s removed from power, will that impact the price of BCE Inc (TSX; BCE, NYSE: BCE) positively? When will the market begin to see the wisdom or foolishness of BCE's recent acquisition?—Ralph B.
 
A. Hi Ralph.
 
If all that happens is the Liberals replace Trudeau and thereby hold onto power, I don’t see the regulatory environment in Canada changing that much for telecoms. But if the Tories manage to win an election and form a new government in the next year—which at this point seems indicated in polls—I would view it as potentially very bullish for the sector.
 
Canadian regulation particularly the past few years has tilted dramatically in favor of new entrants, which simply remarket service on networks owned by the Big 3—BCE, Telus and Rogers. That’s had the near-term impact of pushing down rates for some services. But it’s also clearly discouraged investment in networks, which has hurt service quality and at the end of the day
pushed up the cost of service. Any shift to a more laissez faire approach as is the case in the US would be a plus for BCE.
 
Regarding the pending acquisition of the US fiber company, I think BCE will have first close the deal and then prove its case that the move will boost earnings—and that it can continue to make progress cutting debt. That’s only going to happen over time. But I think a strong reaffirmation of guidance for 2025 including the dividend in early February should provide a solid boost to the stock next year from its currently very depressed level. And I think assumptions of a dividend cut are very premature at best.
 
This stock looks really cheap now for a major company in an essential industry—much as AT&T did a year ago. I think we’re going to need to be patient and I don’t recommend really loading up on any one stock. But I’m sticking with it at this point.

 
Q. Dear Folks, I would appreciate your opinion on Vermillion's (TSX: VET, NYSE: VET) recent acquisition of Westbrick. The company
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was virtually debt free -- how will this affect things?  Also, what do you think about Vermillion's European exploration program? Is this basically a sideshow to its North American ventures? Also, Is it the only solid US-listed company with a European exploration program? Many thanx.--Jeffrey H.
 
A. Hi Jeffrey 
 
I think this acquisition makes sense for Vermilion. And the fact they’re able to strike now is a sign of inner strength that’s not now reflected in the very depressed share price. Vermilion’s European operations continue to contribute reliable earnings. I don’t think their value is reflected in the share price either—as Europe is still perceived as phasing out fossil fuels. They are also small scale compared to those of super majors. But they’re also able to fetch higher realized selling prices than the North American operations.
 
I think VET shares have been hit lately mainly because of softening commodity prices and tax loss selling. But they look cheap now—with the caveat I never recommend
was virtually debt free -- how will this affect things?  Also, what do you think about Vermillion's European exploration program? Is this basically a sideshow to its North American ventures? Also, Is it the only solid US-listed company with a European exploration program? Many thanx.--Jeffrey H.
 
A. Hi Jeffrey 
 
I think this acquisition makes sense for Vermilion. And the fact they’re able to strike now is a sign of inner strength that’s not now reflected in the very depressed share price. Vermilion’s European operations continue to contribute reliable earnings. I don’t think their value is reflected in the share price either—as Europe is still perceived as phasing out fossil fuels. They are also small scale compared to those of super majors. But they’re also able to fetch higher realized selling prices than the North American operations.
 
I think VET shares have been hit lately mainly because of softening commodity prices and tax loss selling. But they look cheap now—with the caveat I never recommend
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loading up on a single stock.
 
 
Q. Gentlemen. I’m interested in hearing what you think about Canadian Natural Resources (TSX: CNQ, NYSE: CNQ). As always I appreciate your insight. Thank you.—Quint
 
A. Hi Quint
 
We track Canadian Natural Resources (TSX: CNQ, NYSE: CNQ) in our Canada and Australia coverage universe. It's currently rated a buy up to 38, a price it's been well above and below--as it is now--over the past year.it will release January 9. The dividend yield is now over 5% and looks set for another increase next year as well.
 
 
Q. Good morning Roger. Is Sunoco LP (NYSE: SUN) a master limited partnership (MLP)? Happy holidays to you, Elliot and Sherry, Best—Barry J.
 
A. Hi Barry. Happy holidays! SUN is an MLP—Energy Transfer LP (NYSE: ET) is the general partner and owns a controlling interest of the common shares as well. I have thought ET might take SUN private
. With energy in an upcycle, the buy price would likely be at a premium to the current price, possibly a value in the low 60s and very likely paid for in stock. But longer term, I’d rather own the company calling the shots, which is ET.
 
Q. Seasons Greeting, Folks. I hope you have time to answer questions about two REITS you have recommended. Both have taken quite a hit. I wonder whether this is just part of the general downward trend these days for REITS, or whether there are company specific issues that need watching. First up is SmartCentres REIT (OTC: CWYUF). Is the company still meeting your expectations? Is the Canadian economy, in your opinion, going to be a major headwind for it? Second is a long-standing favorite of yours -- Alexandria (NYSE: ARE). Its yield is quite high now and its price is quite low. Some analysts have expressed the view that there will be a glut of bio tech/life science space that will damage Alexandria's prospects. What is your take on the company? Do you think it is a decent
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time now to fill out positions? Many thanks, and a happy healthy year for you all. Best—Jeffrey H.
 
A. Hi Jeffrey
 
I don’t really have anything to add to what I wrote about these REITs in the REIT Sheet issue sent December 20. For anyone interested in REITs who doesn’t currently receive The REIT Sheet, I cordially invite you to check it out by calling Sherry anytime M-F from 9-5 ET at 877-302-0749.
 
Getting back to your question, I think both stocks are coming under additional tax loss selling pressure now. And the REITs in general have come down hard the past few weeks—particularly since the Fed indicated it plans only 2 rate cuts next year. The Real Estate SPDR ETF (XLRE) is now basically flat for the year including dividends, after being up by comfortably double digits earlier this month.
 
SmartCentres like all Canadian REITs has also seen its USD price pummeled by the drop in the Canadian dollar to less than 70 US cents. As you point out, the bears’ case against Alexandria REIT has been that there’s a
surplus of space for biotech firms—and that occupancy and rents are going to plunge. I will point out that’s been the forecast for the past couple years and has not panned out, as the REIT’s “campus” focus has kept occupancy high. But I think the stock’s decline has encouraged the bears. And the REIT is just going to have to continue proving its case to investors with performance.
 
The only company specific news for either recently has been the dividend increase and stock buyback announcement at ARE. In the issue, I mentioned ARE as a candidate for tax loss selling, with the idea of buying it back after 30 days. I think the window for that might have closed at this point. But my broader view is still these are both cheap and high quality REITs ripe for buying low, though not overloading.
 
 
Q. Is CLPHY (CLP Holdings) risky because it is a Hong Kong corporation and our next president might forbid us to hold any Chinese stock?—Larry W.
 
A. Hi Larry
 
I think it’s certainly possible the second Trump
administration could expand the number of companies that are off limits for Americans to own. The rationale for delisting the telecoms is they were directly connected to the Chinese military. I think the case was pretty weak. But in the case of CLP, there’s no connection at all—other than the fact they produce electricity on mainland China as well as in Hong Kong. But this obviously is an era where a strong element of both US political parties believes big government knows what’s best for investors.
 
The actual risk to US investors from this kind of action, however, is opportunity cost, rather than real losses. For example, the Chinese telecoms Trump one barred from the NYSE have since then been by far the best performing telecom stocks in the world.
 
I intend to stick with CLP on the basis it’s a well run company, paying a generous dividend that appears poised to break out—with Australian operations no longer dragging it down and opportunities booming in China and India. 
 
Q. Good morning, Roger. The REIT
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Innovative Industrial Properties (NYSE: IIPR) announced the default of a major tenant today Pharmacann. Is the stock a tax loss selling candidate or a hold? Best—Mike C.
 
A. First, this tenant was 17% of rents so there is a potential major earnings impact, though the reaction in IIPR's share price is greater than the actual likely hit. The company will now have to re-rent the properties. But it has been faced with the same challenge multiple times in the past. And if anything, the consolidation in the cannabis industry and the weeding out of weaker players in the past couple years has made that task less difficult.
 
Instead, I think the magnitude of the selling is more due to (1) political uncertainty--worries the cannabis sector is due for a massive contraction from Trump administration policies, despite more states approving medical marijuana in November elections and the new administration giving no indication it intends a crack down and (2) end year selling of a stock that's already underwater this year
potentially for tax reasons.
 
As far as taking a tax loss on this stock, I think the company is going to have to prove to investors that it can maintain investment and financial strategy. With next earnings scheduled for Feb 21 and the REIT maintaining its dividend at $1.90 per share last week, that's not likely to happen in full in the next 30 days.
 
 
Q. Dear Roger, I am going to jump the gun on the coming chat and ask two questions that I hope you'll have time to answer. First, the dividend payout ratio for Lyondell Bassell (NYSE: LYB) is now 80%. The stock is below your dream price of $80, and it appears to be headed lower, with quite an elevated dividend. Do you think the dividend is sustainable at current levels. I added a bit when it dropped below $80.
 
My second question deals with South Bow (TSX: SOBO, NYSE: SOBO). If the Trump administration really does start slapping duties on Canadian oil, what will that do to SOBO and the possible expansion of the Keystone Pipeline, which is all about bringing
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more Canadian crude into the US? Is tariff fear responsible for SOBO's declining share price -- or is it primarily declining Canadian currency and a general fear of an oil glut? Many thanx (and may it be a good New Year for you and yours). Best regards—Jeffrey H.
 
A. Hi Jeffrey
 
I don't think much if anything has changed for LyondellBasell Industries (NYSE: LYB) since I reported on their Q3 results and guidance in November. Basically, we're seeing weaknees across the energy sector as investor concerns grow that global demand will drop next year--in large part because of worries China's stimulus is falling short. China is the largest energy importer in the world and, as the world's second largest economy, how it fares will have a major impact on how fast the global economy grows. That's a genuine concern for refining and chemicals as well, though barring a real global recession there are signs demand will be ahead of supply by the middle of next year.
 
Lyondell has been building businesses that should 
provide a rising share of non-cyclical revenue going forward--especially "green" products and processing. At this point, however, the main business is cyclical refining and chemicals, and earnings are likely to slump again in Q4 as they did in Q3. The saving grace in past down cycles, however, has been cost control and free cash flow. And at this point, I think LYB will remain in enough surplus to continue returning a significant amount to shareholders as dividends and stock buybacks. The stock was well over my highest recommended entry point for quite some time. And in retrospect, I probably should have taken some money off the table. But now it's below the Dream Buy price. And barring something truly negative we haven't seen yet, I intend to stick.
 
As for South Bow: The weakness in the broad stock market, the energy sector and the Canadian dollar have definitely been headwinds to South Bow, particularly the past several weeks. And I think that's what's primarily been responsible for the stock backing off
from $26 plus earlier this month to $23-$24 per share this week.
 
The company's primary asset is the Keystone XL pipeline. The completed "southern leg" transporting oil from the Cushing, OK hub to the Gulf Coast is carrying much of the system load now. But the northern leg does bring oil from Canada. And one of the company's most intriguing prospects is for a restart of the Keystone pipeline extension crossing the Canada/US border, which was blocked in the courts and finally shelved when the Biden Administration rejected the presidential permit. 
 
The first Trump administration favored Keystone and my thought has been a potential restart of the project would deliver a big boost to South Bow--either as an independent company or more likely with a takeover by a larger firm better able to handle the cost. I still think that's likely. But at this point, investors seem more worried by the possibility the Trump Administration will ignore the oil industry and impose disruptive tariffs on Canadian oil and gas that
crosses the border. 
 
The rhetoric is heated for sure. But my view is that at the end of the day it's far more likely Keystone XL is resurrected than North American energy markets are torn apart by a trade war. And in any case, South Bow would still be able to pay its dividend thanks to contracted revenue, even in a worst case for trade. Bottom line: I'm advising staying with South Bow, a buy up to 28.
 
 
Q. I probably won’t be able to join the chat but would appreciate your thoughts on the following. First, what do you think about Solar energy prospects in general and in particular: First Solar (FSLR), Enphase Energy (ENPH), and Nextracker (NXT). Second, what about the appropriateness of investments in limited partnerships in retirement accounts (specifically UBTI). Is there a way to flag investment recommendations that may include UBTI? Thanks—John C.
 
A. Hi John. My view on solar energy stocks for some years has been that the adopters offer a better value proposition for investors than the components
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manufacturers. Basically, the business of making solar panels and other components has been a continuing race to the bottom--to make more efficient products at ever-lower prices. In that game, global scale is key. And no one has played the game better than Chinese giants--who have the same advantage as American companies have had historically. That's a massive and rapidly growing domestic market in which to build scale before competing overseas.
 
The tariffs put in place by the first Trump administration, augmented under Biden and likely to be jacked up further under Trump 2 have protected First Solar from global competition. And they've done the same for Enphase and Nextracker. All three now have the ability to produce 100% US content components, which again should be further advantaged under tariffs.
 
To the extent there has been weakness in these stocks, it's basically related to concerns Trump 2 will eliminate solar tax credits. I see that still as a low probability event. First, it will take an act of
Congress--and at this point he doesn't appear to have the votes in the House and potentially the Senate to do that. And second, Elon Musk is still very much at Trump's side, so this may wind up not being a priority at all. But whatever the case, the cost of solar and paired storage is plunging--crashing lithium prices are one factor. So adopting solar cuts costs--and facilities can be planned, sited, permitted, funded and built generally in 12-to-18 months, so costs can be controlled far better over life of the project than any other power source. Big Tech companies want it to power their data centers and are signing historically massive contracts. And utilities' Integrated Resource Plans are very heavy on solar the next five years, backed by state regulators that essentially control the return on investment.
 
Bottom line: Solar adoption is going to keep growing. But the actual adopters--utilities etc--are much more certain beneficiaries from the growth than component manufacturers. Mainly, their returns are
locked in by regulation and contracts. And even if Trump 2 somehow managed to slow solar growth, that cash will continue to flow to fund earnings and dividend growth. That's stocks like AES Corp (NYSE: AES), Brookfield Renewable (NYSE: BEP/BEPC), Clearway Energy (NYSE: CWEN), regulated utilities and companies that combine utility operations with unregulated generation like NextEra Energy (NYSE: NEE). All are cheap as well. 
 
I would get interested in Nextracker at a price of 30 or lower, FirstSolar at 150 or less and Enphase at 60 or less. All have survived an historic industry shakeout the last four years. All of them have actual earnings. And politics don't appear to pose a big enough risk to knock them from industry leadership--in fact they may well enhance their dominance. But again, as long-term bets I prefer the adopters.
 
 
Q. I know energy is not loved at the moment but South Bow is getting hit harder is there something else out there besides maybe Canadian dollar creating issues?—Lee O.
 
A. Hi Lee
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As I noted answering an earlier pre-chat questions, the weakness in the broad stock market, the energy sector and the Canadian dollar have definitely been headwinds to South Bow, particularly the past several weeks. And I think that's what's primarily been responsible for the stock backing off from $26 plus earlier this month to $23-$24 per share currently.
 
The company's primary asset is the Keystone XL pipeline. The completed "southern leg" transporting oil from the Cushing, OK hub to the Gulf Coast is carrying much of the system load now. But the northern leg does bring oil from Canada. And one of the company's most intriguing prospects is for a restart of the Keystone pipeline extension crossing the Canada/US border, which was blocked in the courts and finally shelved when the Biden Administration rejected the presidential permit. 
 
The first Trump administration favored Keystone and my thought has been a potential restart of the project would deliver a big boost to South Bow--either as an independent
company or more likely with a takeover by a larger firm better able to handle the cost. I still think that's likely. But at this point, investors seem more worried by the possibility the Trump Administration will ignore the oil industry and impose disruptive tariffs on Canadian oil and gas that crosses the border. 
 
The rhetoric is heated for sure. But my view is that at the end of the day it's far more likely Keystone XL is resurrected than North American energy markets are torn apart by a trade war. And in any case, South Bow would still be able to pay its dividend thanks to contracted revenue, even in a worst case for trade. Bottom line: I'm advising staying with South Bow, a buy up to 28.
 
Q. Hi Roger
 
I started with you and Elliot at your past employer, and, in fact, alerted both of you when they continued to use your names, long after you left. I was one of your original subscribers at your new venture(s). I own a lot of EPD, MPLX, PAGP, PBA, OKE, KMI, and some AM, ET, TCP.
 
KMI has had a big run-up
in price, and doesn't pay as high a dividend as the others, and, they screwed their stockholders in the past by cutting their dividend, so, I was wondering what you might suggest as an alternative to KMI, paying a similar or higher % dividend, with more future growth?
 
I have a big profit on KMI, and owned it for many years, so, do you have a suggestion as to whether to sell it now, or wait to sell it after the first of the year? I subscribe to many of your products, but I am not sure about the benefits of some of your newer ventures. Best wishes to you and your family for the upcoming holiday season and a happy and healthy new year.—Mr G.
 
A. Hi Michael
 
Thanks for writing. It's hard for me to believe sometimes that Capitalist Times is now over a dozen years old. And it's no exaggeration to say that it was you and others who came with us at the beginning who made it all possible--even as a lot of once larger companies in this business have fallen by the wayside.
With the Substack venture, Elliott and I are basically trying to expand the audience for our existing advisories by putting them out on a new platform. My "Dividends Premium," for example, is basically CUI Plus and The REIT Sheet packaged together, along with a "Roundtable" that's an interactive channel hosted on the "Discord" software. Since the "Roundtable's" launch a few weeks ago, I've been using it to make comments on stocks. And I hope to open it up to our other CT customers in the near future--not for everyone and as you can see I still answer email. But it is actually fun.
 
Anyway, regards Kinder Morgan, as you've probably been noticing. energy stocks up and down the value chain have been weakening this month. That's in part because of growing concern the global economy is weakening heading into 2025 and with it demand for oil and gas, particularly in China the biggest import market by far. And there's also fear Trump Administration policies will fuel an oil and gas supply glut that will take down
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prices and industry company earnings. 
 
We believe "drill baby drill" policies have the potential to reduce companies' costs, primarily by reducing regulation. Removing barriers on the federal level to building new pipelines and power plants would enable utilities and power generators to rely more on natural gas to meet electricity demand from AI. And granting more export licenses for LNG especially but also oil and NGLs could induce companies to boost plans to increase export-focused production. But US shale isn't the industry it was a decade ago, where the ethos was produce to grow. And the companies that dominate it now won't boost output meaningfully unless they're confident they can sell it at high enough prices.
 
Bottom line: It's possible global energy prices will stay under pressure heading into 2025 on economic concerns. And that means energy stocks could well weaken further. But sooner or later, investors are going to stop being afraid of drill baby drill. And barring a real recession, we should
see energy companies resume upside momentum, including pipelines. 
 
I understand the sentiment about Kinder. But I think by the time this cycle peaks, the stock will be back to at least its highs of the previous cycles--which will be about a double from here.
 
That's actually my eventual outlook for most of the big midstreams, which despite their rally of the past four years or so are still deeply discounted to the peak prices of the previous cycle. So if you want to exit Kinder, i think you will get a better price down the road. But it's also far from the only midstream that's selling at an attractive price now. Looking at your list, Hess Midstream (NYSE: HESM) is one that's on our list and not on yours. My view is Chevron will eventually close on its parent Hess Corp (NYSE: HES) following next year's arbitration case with ExxonMobil (NYSE: XOM) and CNOOC. And following that, it will buy in the rest of Hess Midstream it doesn't own--probably for stock at a value in the low to mid-40s. And in the meantime,
the stock yields 7.5% and is growing the dividend 5-10%--with cash flow growth backed by long-term contracts that track Hess Corp's production plans in the Bakken. 
 
I see you own TC Energy, so you should have received from South Bow (NYSE: SOBO)--which is the spinoff of the Keystone XL Pipeline. Cash flow is steadily growing, which means the 8.6% dividend is likely to be increased at a low single digit percentage rate annually so long as SOBO remains independent. I look for a takeover offer in the next couple years from a larger company. And if the Trump Administration makes Keystone XL regulatory approval a priority, I would expect a much higher offer.
 
Hope this long winded answer helps. Have a great holiday season and Happy New Year--and feel free to write again if you have any more end-year questions.
 
 
Q. Hi Roger. What's going on with LYB? Does it have further to fall or is this a good time to add more?
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Thanks for both CUI & CUI+ - Use them monthly and find them full of good reports and ideas.—Robert Z.
 
A.  Hi Robert. LyondellBasell has basically traded in line with other refiners and is reacting negatively to expectations for softer refining and chemicals margins globally in Q4 and into next year. As I noted a month ago, they're coming off solid results in Q3 with investment plans on track. There's a solid cash flow cushion for the dividend yield, which is now over 7% after this year's increase. And there are emerging signs that prices and margins are set to firm by the middle of next year--as demand exceeds supply. 
 
I'm not a fan of doubling up on falling stocks. And I can't give you a bottom for this stock. But LYB for a long time traded well above my maximum entry point and is now at a good place for those without positions. It's a high quality company operating in a cyclical business.
 
 
Q. Roger, you mentioned WDS in last month’s CUI, but it isn’t anywhere in the Utility Report advice? Thanks—
W.
 
 
A. Hi Larry
 
I don't cover Woodside in CUI. We do track it in Energy and Income Advisor in our "Canada and Australia" coverage universe. I rate the stock a buy up to 25. it's a bit under that now, the primary catalyst being weakness in global oil and gas prices in the second half of the year. But the company is otherwise in good shape with LNG markets firming and facilities generally running 
 
 
Q. Good Morning Roger. Re: USAC: Is this a good company to invest in? Especially given its relationship and part ownership by ET? Best—Joe O.
 
A. Hi Joseph
 
I'd much rather buy Energy Transfer LP (NYSE: ET), which is the general partner of USAC and controls it. My view for a while has been that ET will privatize the rest of USAC when the price is right.
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And in the meantime, USAC has not raised its dividend since May 2015--and coverage is fairly thin.
 
Q. Roger: You wrote in your 11 nov article ("The Investment Boom is On and Utility Values Abound") that the "Endangered Dividends List highlights two fresh dividend cuts and a likely third early next year."
 
Viewing the Endangered Dividends list just now at https://conradsutilityinvestor.com/endangered-dividends-list/, I see four companies, but no clear indication which of them recently cut dividends.
 
Which two companies recently cut dividends? How is this indicated in the table? Thanks. Bur D.
 
A. Hi Bur. At this point, dividend cuts are not indicated in the EDL table itself—other than I remove them after cuts have been made. The table is meant to warn of future cuts, though I suppose a list of actual cut companies could be useful.
 
The two companies that cut dividends were discussed in the text from the Endangered Dividends List section in the November issue. The pdf and html versions are archived on the CUI website.
 
The two companies cutting were Spark New Zealand (NZ: SPK, OTC: SPKKY) and Superior Plus (TSX: SPB, OTC: SUUIF). Per the December issue, there are three companies on the EDL--Spark is still there because of elevated risk the payout will be cut again. Cogent Communications has an extremely aggressive payout policy that's bumping up against cash flow constraints. And we're waiting for NextEra Energy to announce the results of the strategic review of NextEra Energy Partners (NYSE: NEP)--which I would expect to see in mid-January before NEE and NEP announce full Q4 results and 2025 guidance. I believe the most likely outcome is for NEE to increase its ownership in exchange for extinguishing some of the CEPF debt--along with a dividend cut probably of 50-60%.
I think all this is priced into NEP shares and more and expect a rebound on the announcement of a plan.
 
 
Q. I’m getting emails from Roger and Elliott like “Dividends with Roger Conrad” and others. Is the content for these different than the newsletters I currently subscribe to? Thanks! And Merry Christmas to you, Roger, Elliott, and everyone else at Capitalist Times!—Tom L.
 
A. Hi Tom, We’re basically using Substack now as a new platform for selling our CT products to new people, reaching a new audience basically.
 
My Dividends Premium, for example, is REIT Sheet and CUI Plus packaged together. It also includes Dividends Roundtable, which is a members only online discussion channel hosted on Discord—and which I intend to eventually open up to paying CT members. Elliott’s Substack products include Creating Wealth and Smart Bonds, which are also available directly from CT.
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OK that's all I have for pre-chat questions. Let's get to some live ones.
AvatarElliott Gue
2:11
Good afternoon everyone and Happy New Year!
Guest
2:24
Hello Roger: 1. Tell us your thoughts about holding CQP in our portfolio.  I do not seem to see it discussed in the EIA issues.  2. Is that because there are other companies you prefer like EXE?  3. Do you have a dream price for CQP?  Thanks.  Barry
AvatarRoger Conrad
2:24
Hi Barry. That's the main reason. But the further CNQ drops, the more attractive it looks just for yield alone. In a couple of the pre-chat questions, I addressed several issues affecting Canadian energy stocks besides softer oil prices--gas is actually fairly solid now. Those include the CAD slipping under 70 US cents and the risk of cross-border disruption of energy flows. I think it's unlikely we'll see any real disruption at the border--Canadian heavy oil and key to US refineries and the oil industry has made its views known. And I think we'll see CNQ and other Canadian stocks rebound as that becomes evident. I think anything under 30 is a great price for CNQ, 25 or less would be a Dream price.
Guest
2:31
Hi Roger:  Can you tell us your thoughts about purchasing stock in WBA vs. CVS?  Your preference, if any, and why?  Thank you,  Barry
AvatarRoger Conrad
2:31
I prefer CVS to Walgreens. The company is still pushing ahead with its plan to offer integrated insurance, pharmacy and healthcare service, which Walgreens has been forced to abandon. I think the recent tender offer for longer-term debt is definitely a show of strength. And I expect a dividend increase for 2025. I think the stock has been negatively impacted by politics--mainly the misguided view that the Trump Administration is going to destroy pharmacies. And notably, CVS and others won a major opioid case earlier this month. The stock at less than 8X expected next 12 months earnings and yield 6% looks very cheap.
James
2:36
Hi Elliott, I'm a subscriber of CW and am concerned about our positions.  Can you give us your analysis of the equity market?  I'm hearing from some experts that I follow that we are in the process of a major market top and the technical evidence is mounting, especially the poor performance of the market in a seasonally strong part of the year.
AvatarElliott Gue
2:36
The S&P 500 is down less than 3% from its all-time highs and the RSP (Equal Weight S&P 500) is down about 6.5%. There are some valid reasons for concern, including that market breadth has been poor in recent weeks. However, I think it's too early -- Way too early -- to call this a major top. Historically, from a technical perspective, tops are a long process, not an event. In other words, generally you'll see a big rally to new highs, followed by a significant correction and then a new rally to near those highs or even marginal new highs. Over the period of several weeks to a few months the broader averages -- S&P 500, Nasdaq, etc -- slide below their longer-term moving averages (like the 40-week or 200 day) and those averages start acting as resistance on rallies rather than support. Generally what does not happen is a sudden collapse from an all-time high. Given the trends we've been seeing in markets over the past 24 months or so, I think the benefit of any doubt still rests with the bulls. Stocks we hold
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