Canadians are concerned that rising rates in the U.S. could drive the dollar significantly lower against its American counterpart.
If that turns out to be true, companies with a strong presence in the United States should be on your radar.
Let’s take a look at Fortis Inc. (TSX:FTS)(NYSE:FTS) and Altagas Ltd. (TSX:ALA) to see why they might be interesting picks.
Fortis
Fortis owns natural gas-distribution, power-generation, and electric-transmission assets in Canada, the United States, and the Caribbean.
The majority of the investment in recent years has focused on the United States, including the US$4.5 billion purchase of Arizona-based UNS Energy in 2014 and last year’s US$11.3 billion acquisition of ITC Holdings.
Fortis now has about 60% of its regulated assets located in the U.S., which is attractive for Canadian investors looking to get strong exposure south of the border.
Management plans to raise the dividend by at least 6% per year through 2021. The current payout offers a yield of 3.6%.
Altagas
Altagas recently announced plans to acquire Washington D.C.-based WGL Holdings for $8.4 billion.
The deal, which is expected to close in 2018, diversifies the asset base and will make the U.S. home to a majority of the company’s business holdings. The current mix is about a 50/50 split between Canada and the United States.
Altagas recently switched on its groundbreaking battery-storage facility in California, marking an important milestone in the company’s renewable energy segment.
In addition, Altagas has a number of organic projects on the go in British Columbia, including a propane export terminal in Prince Rupert.
Management plans to raise the dividend at least 8% per year through 2021. The current distribution offers a yield of 6.8%.
Is one more attractive?
Both stocks provide strong exposure to the U.S. market with solid guidance on dividend growth over the medium term.
Altagas has pulled back in the wake of the WGL announcement, so there is an opportunity right now to pick up the shares at attractive price and collect an above-average yield.
If you only buy one, I would probably make Altagas the first pick today.
