Monday, December 29, 2008

Fort Chicago Energy

If any money is to be made while our stock market is in the doldrums, it is with dividend paying stock. Our biggest dividend payers are, of course, our income trust stock. Since, I like pipelines; I decided to review the income trust stocks that are pipelines to see if there is anything good there. Also, please note that with high dividend rates come higher risks.

The first pipeline I looked at was Fort Chicago Energy (TSX-FCE.UN). There is a lot to like with this stock, but first I will talk about what I do not like. For the 4 years prior to December 2007 annual report, the Revenues only increased by some 3.2%. This is low. Also, the annual statements prior to 2003 make it impossible to determine the Revenues, as they seem to use some sort of income figure, rather than a Revenue figure.

The Accrual Ratio is high at 7.8% and the Book Value has not increased. I should note that when most of the cash flow is paid out as distributions, book value would suffer. Also, the Current Asset/Current Liability Ratio is low at .61. This means the current assets cannot cover the current liabilities. The Asset/Liability Ratio of 1.27 is better, but not great.

Now I will consider the positive things for this stock. The yield on this stock is high at present, and according to Globe Investor site, it is over 10%. As with all unit trust stock, the distributions are not considered dividends and mostly the income from this trust seems to be taxable. Up until the last annual report of December 2007, the distributions have been increasing quite nicely, as has the earnings, closing price and cash flow. The Return on Equity (ROE) is good at 9.9% running average over the last 5 years and 11.4% for 2007.

I will look at what the analyst say about this stock tomorrow, and then I will return to do entries in this blog in the new year on January 5, 2009.

Fort Chicago owns and operates energy infrastructure assets across North America with three principal businesses of Pipeline Transportation, natural gas liquids and power. The company operates in Canada and US. Its web site is See my spreadsheet at

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

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