Thursday, July 17, 2008

TransCanada Corp

This stock decreased its dividend in 2000 from $1.12 to $.80. This was almost a 30% drop in the stock’s dividends. It took the stock price 2 to 3 years to recover from this. If you look at the spreadsheet, you will see that all the figures for the last 5 years are much better than the 10 year figures. People who had held this stock through its problem certainly suffered. Why I bought this stock in 2000, was because I recognized it as a good stock that was in some difficulty, but that it was bound to recover from its problems.

First of all, I should admit that I have done very well by this stock since I bought it in 2000, just after it cut its annual dividend. According to quicken, I have made some 17% total return per annum on this stock. I would have made a higher return if I had not bought more of this stock in 2006. Since these purchases, I have made only some 11.5% total returns per annum on this stock. Over the last 5 years, I have made some 13% total returns on this stock.

My actual returns, compared to the spreadsheet have to do with the timing of purchases and the fact that the spreadsheet goes from year end to year end and my returns from Quicken are to date. If I look at my stock over the 5 years to December 31, 2007, quicken says I have earned 16.66% on this stock and my spreadsheet says total earnings are 16.34% per annum. Differences are due to formulas and rounding.

It would appear from my spreadsheet that dividends have added some 4% return to this stock over the last 5 years. If you compare this stock with the TSX, you will see that it has not done as well as the TSX over the last 5 years, but has done as well as other Utility stocks. Part of the reason that charts show that this stock has not done was well as the TSX, is that the Charts only take into account the stock price movements. They do not consider the dividend payments.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional.

See my spreadsheet on this company at See my website at for a list of the stocks for which I have put up spreadsheets on web site.

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