Newman says today’s environment is one in which investors should still look for defense first and try to find companies that can grow their dividends. He says the bigger picture is still unsettled, pointing out that he was hoping to see a contraction of Spanish and Italian bond yield as a signal that the negative impact of the European Debt crisis was weakening. But those yields are still expanding; a very bad sign, he says. The impact of Europe could be overpowered by excellent growth out of China or the US, says Newman, but in the meantime he will remain in a defensive posture.
One stock Newman thinks might offer a rare mix of defense and offense in Northland Power (TSX:NPI) . He likes Northland’s near 6% dividend yield and the fact that it has very little exposure to falling commodity prices. With a quiet runup in shares that began last August, the stock isn’t cheap, he warns, but the company is solidly run with a strong history of completing projects on time and on budget. Newman suggests investors look for pullbacks as an entry point.
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Founded in 1987, Toronto-based Northland Power spent much of its public life, which began a decade later, as an income fund. The company converted to a publicly listed corporation on the first day of 2011. Back in the eighties, Northland’s first renewable energy project was tackling the waste problem of a mill in Cochrane, Ontario. The result was was the first Canadian thermal plant to use unprocessed wood chips as fuel. Northland has since established interests solar, wind energy generation, biomass and run-of-river projects that collectively generate more than a thousand megawatts of power.
At press time, share of Northland Power were down .2% to $18.66.