“Have you heard about this Whisper Stock?” — 9.25% Dividend Utility

A good number of folks sent me the latest Sovereign Society teaser email while I was traveling over the weekend, so I thought I’d jump in and take a look for you.

The ad is really for one of the publisher’s conferences, they’re selling some of the content from this recent conference that they call the “Total Wealth Symposium” … they call it the “Escape from Amerika” kit and it includes some stuff about expatriating yourself, living in a cheaper locale with “more freedom,” and it also includes a number of investing ideas.

One of which, now that we approach the point of today’s note, is teased out for us in some detail.

Here’s how they put it in the ad:

“Our intrepid managing editor, Andrew Packer, shared his clear-eyed opinion.

“There are more reasons to be skeptical today. But still there are strong companies that have missed the rally.”

“Take the regulated utilities market, for example. They’re essentially government-granted monopolies that are designed to NOT lose money.

“Which utility does Andrew have his eye on?Well, just last week, he uncovered a tiny power company – trading for less than $12 a share. So far, it’s attracted zero attention from Wall Street analysts, precisely because it’s so small.

“But that didn’t stop Andrew from peeking under the hood, and he liked what he saw!

“This firm has its power tentacles deep into the United States, with a collection of 13 properties supplying major markets.

“Not only that …

“It’s paying a fat 9.25% dividend.

“It’s about to jump from the “Pink Sheets” to the NYSE – where it’ll get a whole lot more attention.

“And best of all, this tiny power company has signed forward contracts with its customers FOR THE NEXT THREE YEARS! That means, no matter what happens in the market – its revenue is safe and secure.

“Look, I’d love to share this stock with you. But it’s far too small to “blast out” to our entire A-Letter list. (Can’t imagine what would happen is 200,000 folks decided to buy it.)”

They also describe this one, on the order form, as …

“an “under the radar” Canadian powerhouse that supplies energy to eight American states… It’s trading for under $12…kicks off a huge 8.71% dividend… and boasts one of the strongest balance sheets in its sector.”

Yes, the yield has jumped around a little bit as they wrote, thanks to some price movement, but it looks like that’s the same company. And the name?

Oddly enough, it’s a stock that I republished an article about for you on Friday — Atlantic Power (ATP in Toronto, ATLIF on the pink sheets).

And yes, as I noted in my older writeup that got republished last week, I do still like this one … this is one of the stocks that used to trade as a hybrid income security, part stock and part bond, but is now a plain old corporation, albeit one with a high dividend. And it is Canadian (though all of their assets are in the US), and does have 13 power generation and transmission assets, and a strong yield … and it does operate in a regulated environment and sell a substantial portion of its energy through forward contracts of various types, though I don’t know exactly the average term (three years sounds close to what I’ve seen for Atlantic Power in the past, so I’ll buy that).

They have been pre-approved to submit a NYSE listing application, I haven’t seen any updated information on when that NY listing might happen, but as of their last quarterly release they were still saying that they expected it to happen in the second quarter … which gives about a month. Their primarily listing is in Toronto right now, not on the pink sheets, so it’s not quite the same as an illiquid OTC stock suddenly getting a major market listing, but since they think about half of their shareholders are in the US it would certainly help.

My gut feeling is that yes, the stock should probably have more upside with a NYSE listing, given what I think will probably be a resurgence in interest in “safe” utility stocks and the fact that Atlantic Power will come in at the top of most lists for the highest yielding utilities, but there’s certainly no guarantee of that — I like the company and would consider buying it for the dividend and the broad array of generating assets, but I’d buy it to own, not to trade off of a possible boost from a US listing.

If you’ve got a feeling about Atlantic Power or any of their regulated or unregulated utility brethren, let us know with a comment below — thanks!


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24 Comments on "“Have you heard about this Whisper Stock?” — 9.25% Dividend Utility"

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Guest
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Guest
May 25, 2010 8:21 pm

Have owned this one for a while. I think your assessment is right. Nice dividend, some safety but not a "multi-bagger" as most teaser stocks are purported to be

MDG
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MDG
May 25, 2010 8:58 pm

I've also owned this stock for awhile (over two years) and seen the stock price go up from the 7's to as high as the high 12's, not that that's why this stock is usually bought. It is also one of the few Canadians that has actually increased its dividend (in December of 2008, I believe). I got an email from Investor Relations and they confirmed the plan to list on NYSE, but it could be as late as the beginning of Q3.

Sam Godambe
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Sam Godambe
May 25, 2010 4:16 pm

I always had a concern whether they (Pink Sheet stocks) actually pay dividends. from the above two comments, am I safe to assume that they pay the dividends in cash?

Alan
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Alan
May 25, 2010 4:30 pm

Enter text right here!I see that stock paid a .09 dividend. Yield is .80. Help me. What am I missing??

Eric
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Eric
May 25, 2010 9:54 pm
AtlantaExplorer
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AtlantaExplorer
May 25, 2010 11:23 pm

I can't find this ticker on Yahoo Finance, either as ATP or ATLIF. Does anyone know what is going on? (Just wanted current price.) Love monthly dividends! So would appreciate your help. (Maybe the conversion to NYSE has started?) Thanks!

Heller
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Heller
May 26, 2010 2:25 am

Symbol is ATLIF.PK on Yahoo. This is one of Roger Conrad's top picks.

AtlantaExplorer
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AtlantaExplorer
May 26, 2010 1:03 pm

Advice please: If pink ATLIF is about to join the NYSE, should I buy pink version? Or should I buy the Toronto version? Buying Canadian costs me $27 fee at Scottrade, so would rather become NYSE.

Thanks to all for ticker info; I actually was on MoneyCentral.msn.com when the tickers suppliedd in article didn't work. Guess I should always use Yahoo!
Thanks!

TwoHands
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TwoHands
May 26, 2010 6:45 pm

Copied from the Yahoo board — original post May 20, 2010…
http://messages.finance.yahoo.com/Stocks_%28A_to_
_____________________

Doing my due diligence.
I read through the last quarterly report. First quarter 2010.
Cash flow dropped significantly per share.
Payout ratio up substantially.
Sale of two projects at a loss due to no EBITDA.

2010 was supposed to be better than 2009 even though both were bad years for economies all over the world.

If you pay out all of your cash flow and cash flow declined substantially this is a real negative to me.

So what am I missing??

stockcrazy10
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May 26, 2010 8:22 pm

You're not missing anything. That's return of capital.

rod
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rod
May 26, 2010 8:35 pm

RE: Atlantic power, most of their power plants are powered by natural gas, so if or when the new carbon tax comes in effect, they are going to be in a good position

Going loco
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Going loco
May 27, 2010 10:47 am
I don't want to be critical but one of the key metrics I use here in the UK for any equity that pays a dividend does not seem to be mentioned over the pond very often. It's called "dividend cover" . It is a simple calculation of net after-everything earnings (NOT EBITDA) divided by total dividends paid. So a company which makes $1m dollars net and pays out $0.5m in dividends would have a dividend cover of 2. It's a rough-and-ready ratio to distinguish between companies that are paying every last cent (and sometimes a bit more) to their shareholders,… Read more »
Getting in!
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Getting in!
June 1, 2010 2:58 am

Do you have any suggestions for a discount broker that doesn't kill you for buying stocks from Canada?

DumbInvestor
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DumbInvestor
September 17, 2010 11:57 pm

NYSE stock symbol AT

Gravity Switch
Admin
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May 25, 2010 9:25 pm
As far as I know they pay in cash, I've never owned them but they appear to. There's a big difference between foreign stocks that happen to have a pink sheets listing for convenience, like Atlantic Power (or BMW, or hundreds of others) and those that are really tiny junk penny stocks that are primarily traded on the pinks — not that you shouldn't be suspicious, but if you want full info on a stock, particularly a foreign one, that trades on a pink sheet listing it's often best to get it directly from the company (in this case, AtlanticPower.com).… Read more »
Gravity Switch
Admin
11
May 25, 2010 10:07 pm

The div is paid monthly, and in Canadian dollars. Annuallized it would be about C$1.09.

JohnM
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May 25, 2010 10:16 pm
StarCruzer
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StarCruzer
May 25, 2010 11:56 pm

Enter text right here! At Yahoo, enter ATLIF.PK Be sure and download a free currency converter for your desktop. Check current prices on the Toronto exchange at http://www.tmx.com and enter ATP

Sam Godambe
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Sam Godambe
May 25, 2010 8:23 pm

Thanks a lot Travis,

Would it be the same for Australian, Japanese or Korean stocks on Pink Slip?

Gravity Switch
Admin
11
May 26, 2010 1:29 am

As a general rule, yes — some pink sheet foreign stocks are official ADRs, some are effectively just symbols used by brokers for the purchase of foreign stock and trade very rarely, but you almost always get better information from websites in the home market (ie, at the LSE's site for London-listed stocks), or from the company's own website and filings. If you're ever in doubt about which ticker symbol matches which company, check the CUSIP number, those are more universally used, though sometimes harder to identify.

Gravity Switch
Admin
11
May 26, 2010 6:18 pm

In my experience, what usually happens in these cases is that the pink sheets holding would be converted automatically by your broker into a NYSE position with the new ticker — but I don't know if that necessarily happens every time, I'd check with your broker.

Ram
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Ram
May 27, 2010 2:02 am

Thanks. If it is Return of Capital, how long is it expected to go on? Also, is the tax treatment different for Return of Capital as compared to dividends?

stockcrazy10
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May 27, 2010 3:32 am

It'll continue as long as the company continues distributions without earnings to support them.

Return of capital is a payment from a security to an investor representing the return of all or a portion of an original investment and thus decreasing the value of that investment. You won't be taxed on the return of capital until you sell your shares using the reduced basis (original basis – untaxed return of capital).

JIF
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JIF
June 2, 2010 12:41 am

Interactive Brokers is the best bet if you are a relatively experienced and active trader.

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