Wednesday, December 9, 2009

TransCanada Corp

Today, I want to start reviewing some good conservative dividend paying stock. I had written a blog awhile ago about stating a portfolio, and so I want to review some of these stocks. See my site for this blog. I am starting with TransCanada Corp as I just read a review on this stock that said now was a good time to buy it.

I first bought this stock in 2000 and I bought some more in 2006. I have made a return of 10.5% on this stock. If you look on the spreadsheet, the 5 year and 10 year total return is just under 8% per year. The dividend payments have been just over 4% per year during both these periods. This stock has had good returns for a low risk investment.

The things that analyst note about this stock is that it is a low risk investment. It also has solid dividends. It should soon see better earnings from its Ravenswood Power Plant in NYC next year and it is building the Keystone pipeline to pile oil from Alberta to the Midwest of USA. It is felt that the share price of this stock should rise nicely in the next 12 months.

The growth figures on this stock are a mixed bag, but they are mostly not bad. They have been issuing shares to fund projects, so even though things like revenue has grown not badly over the years, the revenue growth per share is rather low, coming in a just under 5% per year over the past year. The last 12 months revenue grow by about 5.5% this year, but when you take into account the increase in shares, it has actually declined by 4.5%.

One good thing to talk about for this stock is that the dividends have steadily increased and the 5 year growth in dividends is just under 6% per year. They increased their dividends both last year and this year. There were a lot of stocks that did not increase their dividends this year. This company increased their dividends by just over 4%. The other good thing is the increase in Book Value per share. This has increase by over 10% per year over the last 5 years. The Book Value has also increase this year by just over 9.5% per share, even though new shares were issued.

The Liquidity ratio for this company is a little low at only 0.86, but the Asset/Liability Ratio is strong at 1.60. I like to see both these ratios at or above 1.50. The Return on Equity (ROE) is not bad for this stock. The 5 year average is 12% and the one for the year ending 2008 just over 11%. The ROE so far this year is running at a lower rate of 8.5%. This is still a decent figure.

I am happy with this stock. It is safe and its total returns are reasonable. I will talk more tomorrow, on what the analyst’s recommendations are.

TransCanada’s businesses are organized into two segments: Pipelines and Energy. The Pipelines business is principally comprised of TransCanada’s pipelines in Canada, the United States and Mexico. The Energy business includes power operations, natural gas storage and liquefied natural gas (LNG). 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. Also, look at other investing notes on my website at

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