If you like dividend stocks, you love utilities because they are highly regulated, which means high barriers to entry and once they own a hydro plant, it is like printing money. The capital of the building of the plant is soon paid off, the cost of operating relative to the cash flow is low and the water from the river flows for generations past and into the future. Prior to the 1970’s and Watergate, it was relatively easy for any company to tap the potential of the raging rivers across North America. After the 1970’s the public became more cynical and less trusting of government (for some very good reasons). Prior to the 1970’s if a hydro project was proposed, although there would be people that talked about the consequences, the overwhelming general population said this would be good for jobs, the economy, and the future. The book Electric Rivers the story of the James Bay Project by Sean McCutcheon, Black Rose Books, Montreal and NY, 1991 was set in the 1970’s. The setting is a drive 16 hours north of Montreal, which means very few people live there and the politicians and the engineers saw taming the natural landscape and sending electric power south as their salvation. It has worked, hydro continues to be less expensive that the alternative of oil and gas, as long as the ability to send the hydro down the wires exist, the hydro dream of tapping the rivers of the north is a reality.

On the other side of the coin, to ensure the hydro stations work, large lakes were formed, which flooded the land; the habit, which is slow to adapt in the north, decreased and may have stabilized and whatever the normal patterns of the people were changed, some parts for the better. What is important is now that the hydro stations are in and have been operating for a period of time, all the data used to promote new developments can be used to suggest what if it does not go through. What parts of the nature habitant must be looked at first instead of last.

Linking to dividend paying stocks, while they are fewer and fewer untapped rivers to produce hydro; there still are pipelines to be laid for the utility sector. As an investor you are drawn to this sector because it is capital intensive which keeps competition low; there are thousands of people paying for the service on a monthly basis with very few alternatives not to use them (someone may switch from electricity to oil or gas, but it could all be the same company). In the last century it was much easier to build the hydro dam or put down the pipeline, now there will be more challenges because both sides should know the pros and cons better in order to make an informed decision.

There are more questions than answers, till the next time – to raising questions