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Roger S. Conrad needs no introduction to individual and professional investors, many of whom have profited from his decades of experience uncovering the best dividend-paying stocks for accumulating sustainable wealth. Roger built his reputation with Utility Forecaster, a publication he founded... More
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  • Income Investors Take A Look At Atlantic Power Corp 6 comments
    Jul 30, 2012 12:31 PM | about stocks: OGE, AT

    With memories of 2008 fresh and worries of European credit contagion surging, it's no wonder investors discount companies with perceived transaction risk.

    That's certainly true of Atlantic Power Corp (TSX: ATP, NYSE: AT), which is raising debt and equity capital to fund a 300-megawatt wind plant in Oklahoma.

    The plant is on track for startup in November, selling all output under a 20-year contract to utility OGE Energy Corp (NYSE: OGE). Atlantic has temporarily funded the deal--and related construction expenses under a CAD290 million construction loan and a CAD20 million credit line.

    Permanent financing will include the CAD130 million sale of convertible debentures (upsized from CAD125 million) and the sale of 6 million shares of stock.

    Until the plant is running and paid for, this utility stock will face no shortage of skeptics. That's evident from the neutral-to-bearish analyst sentiment, which is no doubt also influenced by the drop in wholesale power market prices in North America.

    There's also the matter of running the Capital Power assets for a full year, and Florida power sales contracts up for renewal in a couple years.

    On the plus side, CEO Barry Welch has affirmed that selling prices for 85 percent of the company's output are locked in. And though management is sticking to conservative full-year payout ratio guidance of 92 percent to 97 percent, the 55 percent posted for the first quarter is a good start toward beating that.

    The upshot is this undervalued stock looks cheap again.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: long-ideas Stocks: OGE, AT
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  •  
    Canada will take 15% of your dividend with this stock. And most brokers will charge a foreign tax processing fee of 2-4% as well. Don't help the Canadians get rich, avoid this stock.
    30 Jul 2012, 01:24 PM Reply Like
  •  
    No Canadian tax on dividends is withheld in an IRA.
    30 Jul 2012, 02:15 PM Reply Like
  •  
    "Canada will take 15% of your dividend with this stock. And most brokers will charge a foreign tax processing fee of 2-4% as well. Don't help the Canadians get rich, avoid this stock."

    Wow. Complete and utter mis-information.
    If AT is held in an IRA there is ZERO tax taken from dividends.
    There is NO foreign tax processing fee either.

    If you are going to post then please post the whole story.
    30 Jul 2012, 02:19 PM Reply Like
  •  
    In addition, the withheld tax can be credited to your US tax liability by filing a form 1116. Good company
    30 Jul 2012, 04:47 PM Reply Like
  •  
    I own AT in an IRA and no tax is withheld by e*trade; it is withheld in my taxable account but by US/Canada treaty is credited to my US tax liability when I file form 1116.
    30 Jul 2012, 05:36 PM Reply Like
  •  
    The good with Atlantic Power is that they have only one coal plant which is a small percentage of their total power generation capacity. So they would seem to be in a good position to sell their power as coal plants are decommissioned in the US

    However, I'm not so convinced that their common dividend is sustainable with their debt load.

    There is a cumulative preferred AZP-A traded on the Toronto exchange. $25 par value with 4.85% coupon. It trades at about $13.70. So the yield on current price is about 8.8%

    Any thoughts on why this would not be a more secure dividend then the common? I understand the common has some upside potential ... but it also has downside potential if the dividend is reduced.

    Would appreciate any thoughts.
    17 Aug 2012, 10:56 AM Reply Like
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