Hydro One (TSX:H) is engaged in the transmission and distribution of electricity across Ontario. Shares encountered turbulence in the second half of 2018 after the Ontario provincial election.
Premier Doug Ford and his Progressive Conservative Party fulfilled a promise to remove Hydro One’s CEO and the entire board of directors after coming to power.
This led to U.S. regulators stamping out Hydro One’s acquisition of Avista. However, Hydro One stock has shown impressive strength since the summer of 2018. Shares are up 11% year over year.
The company released its first-quarter results for 2019 on May 9.
Adjusted earnings per share surged to $0.52 compared to $0.35 in the prior year. This was primarily due to catch up revenues, favourable weather, and lower taxes. Revenues climbed to $1.76 billion over $1.57 billion in Q1 2018.
Hydro One announced a 5% hike to its quarterly dividend. It will now pay out a quarterly payment of $0.2415 per share. This represents a nice 4.4% yield.
Hydro One has faced turbulence and negative sentiment over the past three years, but much of it has been unwarranted. The utility boasts a wide economic moat and now has increased flexibility after the Avista deal fell through. It has plenty of ammunition for acquisitions going forward.
The stock had an RSI of 69 as of mid-afternoon trading on May 13. This puts it very close to technically overbought territory. Hydro One has a forward P/E of 15, and still boasts a solid value right now if it can carry its first-quarter momentum into the rest of the year.
