Is it a good company at a reasonable price? This is a utility stock. Utility stocks tend to give you a nice dividend but not much growth. This is a trade off between the dividend rate and growth. Utility companies tend to do fine in all economic situations because people need what they produce. It is not exciting, but steady. I plan to hold on to this stock. It is testing as in the expensive range, so now may not be a good buying opportunity.
I own this stock of Canadian Utilities Ltd (TSX-CU, OTC-CDUAF). This is a dividend growth utility stock. This stock is closely linked to ATCO Ltd. (TSX-ACO), so you would not buy both.
When I was updating my spreadsheet, I noticed that the company had an impairment write-off for 2025 of $471M. This goes a long way to explain the much lower EPS for 2025. My total return for this stock I have had for 9 years is 7.17% with 3.11% from capital gains and 4.06% from Dividends. This stock seems to often have long term returns in the 7% range. But this is a utilities stock and they tend not to have great returns. It is a steady dividend payer. I noticed that the dividend increases have been around 1% per year over the past 5 years.
If you had invested in this company in December 2015, for $1,022.08 you would have bought 32 shares at $31.94 per share. In December 2025, after 10 years you would have received $534.69 in dividends. The stock would be worth $1,367.36. Your total return would have been $1,902.05. This would be a total return of 7.51% per year with 2.95% from capital gain and 4.56% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $31.94 | $1,022.08 | 32 | 10 | $534.69 | $1,367.36 | $1,902.05 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.69%. The 10 year and historical dividend yields are moderate at 4.78% and 4.05%. The 5 year historical dividend yield is good (5% to 6% ranges) at 5.26%. The dividend increases are low (below 8% per year) at 1% per year over the past 5 years. The DPRs are too high, that is probably why increases are so low.
The Dividend Payout Ratios (DPR) could use some adjustment. The DPR for 2025 for Earnings per Share (EPS) is far too high at 1221% with 5 year coverage at 124%. The DPR for 2025 for Adjusted Earnings per Share (AEPS) is too high at 76% with 5 year coverage at 77%. The DPR for 2025 for Cash Flow per Share (CFPS) is good at 26% with 5 year coverage at 27%. The DPR for 2025 for Free Cash Flow (FCF) is non-calculable with 5 year coverage at 473%. FCF varies from a negative $50M, which I am using to $472M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 1220.53% | 124.12% |
| AEPS | 75.68% | 77.48% |
| CFPS | 25.51% | 26.67% |
| FCF | -916.00% | 473.00% |
Debt Ratios like Liquidity is fine, but the company has too much debt. The Long Term Debt/Market Cap Ratio for 2025 is too high at 1.03 and currently high at 0.86. The Liquidity Ratio for 2025 is good at 1.56 and 1.32 currently. If you added in Cash Flow after dividends, the ratios are fine at 3.02 and currently at 2.80. The Debt Ratio for 2025 is low at 1.37 and 1.38 currently. The Leverage and Debt/Equity Ratios for 2025 are too high at 3.72 and 2.72 and currently at 3.64 and 2.64. I prefer these ratios to be under 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term | 1.03 | 0.86 |
| Intan/GW | 0.07 | 0.08 |
| Liquidity | 1.56 | 1.32 |
| Liq. + CF | 3.02 | 2.80 |
| Debt Ratio | 1.37 | 1.38 |
| Leverage | 3.72 | 3.64 |
| D/E Ratio | 2.72 | 2.64 |
The Total Return per year is shown below for years of 5 to 37 to the end of 2025. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2020 | 5 | 1.00% | 11.69% | 6.57% | 5.12% |
| 2015 | 10 | 4.49% | 7.51% | 2.95% | 4.56% |
| 2010 | 15 | 6.08% | 7.16% | 3.06% | 4.10% |
| 2005 | 20 | 6.20% | 7.18% | 3.38% | 3.80% |
| 2000 | 25 | 5.77% | 9.19% | 4.96% | 4.23% |
| 1995 | 30 | 5.52% | 11.78% | 6.48% | 5.30% |
| 1990 | 35 | 4.92% | 11.66% | 6.26% | 5.40% |
| 1988 | 37 | 4.74% | 11.32% | 6.02% | 5.29% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 19.82, 22.40 and 24.98. The corresponding 10 year ratios are 17.83, 20.31 and 22.55. The corresponding historical ratios are 12.11, 13.77 and 15.81. The current ratio is 19.81 based on EPS estimate for 2026 of $2.53 and a stock price of $50.11. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 13.77, 15.45 and 17.07. The corresponding 10 year ratios are 13.80, 15.61 and 17.82. The corresponding historical ratios are 13.80, 15.75 and 17.70. The current ratio is 19.73 based on AEPS estimate for 2026 of $2.54 and a stock price of $50.11. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $32.41. The 10-year low, median, and high median Price/Graham Price Ratios are 1.00, 1.14 and 1.28. The current ratio is 1.55 based on a stock price of $50.11. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.85. The current ratio is 2.73 based on a stock price of $50.11, Book Value of $5,004M and Book Value per Share of $18.38. The current ratio is 47% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2026 of $18.74. This analyst calculates the Book Value differently than I do and, in this case, the 10 year ratio is 1.43. The P/B Ratio is 2.67 based on a Book Value per Share of $18.74, Book Value of $5,102M and a stock price of $50.11. This ratio is 86% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.46. The current ratio is 6.63 based on a stock price of $50.11, Cash Flow per Share estimate for 2026 of $7.56 and Cash Flow of $2,058M. The current ratio is 21% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 4.05%. The current dividend yield is 3.69% based on a stock price of $50.11 and dividends of $1.8492. The current dividend yield is 9% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 4.78%. The current dividend yield is 3.69% based on a stock price of $50.11 and dividends of $1.8492. The current dividend yield is 23% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 2.53. The current P/S Ratio is 3.24 based on Revenue estimate for 2026 of $4,212M, Revenue per Share of $15.47 and a stock price of $50.11. The current ratio is 28% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably relatively expensive. I would rate this a Hold. The 10 year median dividend yield test says that the stock price is expensive. The P/S Ratio test confirms this. Most of the rest of the testing is saying the same thing.
When I look at analysts’ recommendations, I find Strong Buy (1), and Hold (6). The consensus would be a Hold. The 12 month stock price consensus is $50.00 with a high of $55.00 and low of $46.00. The consensus stock price of $50.00 implies a total return of 3.47% with 0.22% capital loss and 3.69% from dividends based on a current stock price of $50.11.
There are few entries on this stock on Stock Chase. The one for 2025 says it is a buy. Others do not like this stock because they prefer others like Fortis. Amy Legate-Wolfe on Motley Fool says that safe dividend stocks rarely feel exciting. Then markets get choppy, rates stay stubborn, and suddenly those less exciting options look highly appealing. Adam Othman on Motley Fool says CU is an excellent dividend-paying stock with a 54-year dividend-growth streak. The company put out a Press Release about their fourth quarter of 2025. The company put out a press release via Newswire about their first quarter of 2026.
Simply Wall Street via Yahoo Finance reviews this stock and suggests that it is 12.7% overvalued with the Discounted Cash Flow Method and undervalued using the Price to Sales method. Simply Wall Street has 4 warnings out on this stock of dividend of 3.66% is not well covered by earnings or free cash flows; interest payments are not well covered by earnings; profit margins (0.8%) are lower than last year (10.6%); and large one-off items impacting financial results.
Canadian Utilities Ltd, a subsidiary of holding company Atco, offers gas and electricity services. The company is engaged in segments that include ATCO Energy Systems, ATCO EnPower, ATCO Australia, and Corporate & Other. Headquartered in Calgary, Alberta, the firm mainly operates in Canada, Australia, and others. Its web site is here Canadian Utilities Ltd.
The last stock I wrote about was about was Mullen Group Ltd (TSX-MTL, OTC-MLLGF) ... learn more. The next stock I will write about will be Ag Growth International (TSX-AFN, OTC-AGGZF) ... learn more on Monday, June 1, 2026 around 5 pm.
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