Canadian Utilities Investment Strategy

Introduction

We had previously rated Canadian Utilities as a ‘Hold’ and bought the preferred shares in anticipation of a high reset yield. We sold the preferred shares after a 19% return in 6 months, as peak yields for Government of Canada 5-year bonds were reached. The common stock has retraced a bit, and that allowed us to create a new 10% yield using covered calls on this dividend aristocrat.

Investment Strategy

Investing in Canadian Utilities has been a strategic move for us as we anticipated a high reset yield from the preferred shares. After observing a 19% return in just 6 months, we made the decision to sell the preferred shares to capitalize on this gain. With the common stock experiencing a slight retrace, we saw an opportunity to generate a new 10% yield using covered calls on this dividend aristocrat.

Impact on Individual Investors

For individual investors, this investment strategy could present an opportunity to generate attractive returns by carefully timing the purchase and sale of preferred shares and utilizing covered calls on common stock. By taking advantage of market fluctuations and keeping a close eye on bond yields, investors can potentially maximize their gains in the Canadian Utilities sector.

Impact on the Global Economy

The success of our investment strategy in Canadian Utilities could have broader implications for the world economy. By demonstrating the effectiveness of actively managing investments based on market trends and bond yields, this approach could influence other investors to adopt similar strategies. This could potentially lead to increased volatility in the markets as more investors engage in tactical investment moves.

Conclusion

Our experience with Canadian Utilities highlights the importance of staying agile and proactive in managing investments. By carefully monitoring market conditions and making strategic moves based on anticipated yields, investors can capitalize on opportunities for growth and maximize their returns. This approach not only benefits individual investors but also has the potential to impact the global economy by influencing investment trends and market dynamics.