Fortis Inc.: A Quality Utility That Looks Cheap?!

The main content for this article first appeared in the Seeking Alpha Marketplace service DGI Across North America, in which other utilities were discussed.

Utilities have been great income-growth investments over the long term. The Canadian utilities have dipped meaningfully recently. So, I think it’s a great time to check out Fortis Inc. (TSX:FTS)(NYSE:FTS).

electric distribution

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Get a +5% Yield From This Stable Company

The main content for this article first appeared as 1 of 9 top Canadian dividend ideas for December 2017 in the Seeking Alpha Marketplace service DGI Across North America.

Brookfield Property Partners LP (TSX:BPY.UN)(NYSE:BPY) is a reasonably-priced stock in a fully-valued market. Now is an excellent opportunity to buy Brookfield Property (below ~CAD$28 per unit on the Toronto Stock Exchange and at ~US$22 on the New York Stock Exchange) for income.

office building with a friendly smiling cartoon character beside it

The Business

Brookfield Property owns and operates a global portfolio of real estate assets with a focus in North America. It has ~US$152 billion of assets under management, of which ~73% are in North America. Nearly 17% are in the United Kingdom and Europe, ~8% are in Australia and Asia, and <2% are in Brazil. It has 30 offices, around the globe, where it has ~250 investment professionals and ~16,000 operating employees to get the job done.

About 80% of its portfolio is in core office and retail assets, which targets total returns of 10-12%. The remainder of the portfolio is in opportunistic investments, which target higher returns of 18-20%.

The core portfolio focuses on generating stable cash flows, which help with paying its +5% yield. The opportunistic portfolio aims to invest in mispriced properties in multifamily, industrial, hospitality, triple net lease, self-storage, student housing, and manufactured housing sectors.

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Why This Growth Stock Went Up +10% on Monday

This first appeared in the Seeking Alpha Marketplace service DGI Across North America, from which you can get real-time buy and sell alerts (and explanations) when I make moves in my portfolio.

Summary

  • NetEase up 10.4% on Monday. My position is up nearly 17% in a little over 2 months.
  • News came out that it plans to buy ~$11 billion of inventory over the next 3 years from the U.S., Europe, and Japan to sell to the Chinese market.
  • NetEase is primarily a video game publisher in China that has been diversifying into e-commerce.
  • NetEase is reasonably valued after the pop based on the consensus low-end earnings growth estimation.
  • Interested investors can nibble here to start a position, but will be safer to buy on a meaningful dip — perhaps one will occur when the company reports Q3 results on Nov 15.

Occasionally, dividendfocused portfolios need some growth to spice things up. And NetEase Inc. (ADR) (NASDAQ:NTES) is a good candidate for consideration.

NetEase stock appreciated 10.4% on Monday. In the DGI Across North America service, I gave a real-time alert and the reasoning for buying NetEase, which is now up nearly 17% in a little over 2 months.

NetEase position November 2017

Source: Author

The following quotes are excerpts from my previous article that’s available in the service.

NetEase was founded in 1997 and has been listed on the NASDAQ since June 30, 2000. Even for an investment that was made at the end of 2007 would have delivered an annualized return of 32%!

This outperformed Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) which has delivered an annualized return of 10.8% in the period, Baidu (ADR)(NASDAQ:BIDU): 19.6%, and even Amazon (NASDAQ:AMZN): 27.2%.

NetEase is the second-largest video game publisher in China.

In 2016, NetEase generated 73.3% of its revenue from its online games.

NetEase PC games Q2 2017

Source: Company Q2 2017 presentation – Slide 6

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