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Wednesday, November 3, 2010

The Consumers’ Waterheater Income Fund (CWI.UN) / EnerCare Inc.: a killer company

Lately, a reader asks my opinion about The Consumers’ Waterheater Income Fund (CWI.UN). I first bought some units of The Consumers’ Waterheater Income Fund (CWI.UN) several months ago after reading that Derek Foster himself was holding some units of CWI.UN. I found CWI.UN interesting because of its low trading price (less than 6$ per unit). This makes it possible to own hundred of units at a fair price in order to receive the benefits of a very interesting dividend: 0.648$ annual dividend per unit. Cannot say no to that right?

In the past couple of months, CWI.UN value had been quite volatile, driving me quite crazy. At a point, I taught: should I be selling my Consumers’ Waterheater Income Fund (CWI.UN) units like Derek Foster? Even if I usually copy Derek Foster investment portfolio quite often without any shame lol, I am still able to make my own choices right. A hold a couple of diamonds in my portfolio and some of them come from my own pick. Among them, Just Energy Income Fund (JE.UN) is probably the “stock pick” I am the most proud of. And I actually borrow money on a credit card balance transfer to invest in JE.UN. Yeah, I know, crazy move, but it wasn’t stupid. Just Energy Income Fund is currently exploding.

Anyway, just to come back to my The Consumers’ Waterheater Income Fund (CWI.UN), if you want my point of view, Derek Foster should stick to his own strategy: stick and hold. I am a stick and hold type of investor myself and I got good result just by following the basic of investment. But what if the basic of investment rules where just more than the basic? At a point, I begin to think that the basics are just more than the basic, they are the leading rules of investment.

The Consumers’ Waterheater Income Fund (CWI.UN): dividend yield is of 11.077% - quite impressive if you want my opinion.

The Consumers’ Waterheater Income Fund (CWI.UN) total revenues kept increasing for the past 3 years. Check it out:

2007: 168,128$
2008: 180,523$
2009: 188,246$
(in term of millions of $ of course…)

No way, I am not going to sell this baby lol… And 2010 should be the same. We should be good revenues for The Consumers’ Waterheater Income Fund (CWI.UN) again in 2010.

The Consumers’ Waterheater Income Fund (CWI.UN) does business in, of course, water heater, but that’s not all. In October 2010, The Consumers’ Waterheater Income Fund (CWI.UN) had acquired a small but profitable business name Enbridge Electric Connections Inc. specializes in electricity. Awesome isn’t?

Real soon, The Consumers’ Waterheater Income Fund (CWI.UN) will convert into a dividend-paying corporation. Since a name change is required, the company new name under the conversion will be EnerCare Inc. Ok for EnerCare Inc. But the best news is, once the conversion approved, EnerCare plan to maintain the current distribution level. Which mean that the dividend will remain at 0.648$! Very good!

So when it comes to The Consumers’ Waterheater Income Fund (CWI.UN) I only have good words. CWI.UN recently reached 6.08$ per unit, it’s highest ever.

So now, I am going to show you how to invest like a New Brunswicker and I am going to tell you to BUY and HOLD The Consumers’ Waterheater Income Fund (CWI.UN) :0). Have a good night and let’s pray for Barack Obama.


Avrom said...

Hi Sunny,

Yes a great income generating investment with an 11% return, but be careful :) The dividend yield is high only becuase the stock has lost a lot of share value since May 2007.

With a high PE Ratio of 23.68, a debt ratio of 81%, and trading near its 52 week high, I think caution may be warranted.

You could put a stop-loss-limit on this stock, so you can still enjoy the high monthly dividend payout, but protect yourself if it does indeed go down or cuts its dividend :)

Glad to see your portfolio is doing well! Have a great weekend Sunny :)


KeenBeam said...

I was just checking the net for the latest news on CWI and I came across your blog. I picked up CWI.UN in 2008 when it was around $10 and yielding 12.89%. I have decided to stick with it as that was my original gameplan and hopefully it makes money for me in the long run. Every now and then I do get an urge to unload it at a loss and buy something else though! ;)

Sunny said...

Hi Avrom,

Thanks for sharing your view on CWI.UN. I think that what you are explaining could be the reason why Derek Foster sold his CWI units. Or part of the explanation. Anyway, I still own CWI.UN.

Hi KeenBeam,

CWI.UN at 10$ per unit? Wow! Sincerely, I think its a good thing that you stick to CWI.UN because CWI.UN had some chances maybe to hit the old 10$. I like CWI.UN, they seem to be well manage and I think they are willing to diversify their business.

KeenBeam said...

Hey Sunny, Thanks for swinging by my blog. The dividend cut hurt a little and hopefully the new EnerCare entity excels and makes its investors money! They do plan on keeping the dividend at its current rate if I read the circular correctly!


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