TransAlta Corp

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I own this stock of TransAlta Corp (TSX-TA, NYSE-TAC). I first bought this stock in 1987 and I bought more in 2009. I sold small amounts of this stock in 2000 and in 2012. It has not been a top performer, but it has done ok over the years. My Total Return on this stock is 7.02% per year with 7.81% from dividends and with a capital loss of 0.79%.

This stock has a current dividend yield of 7.86% and has a 5 year median dividend yield of 5.35%. This stock has never been dividend growth stock as they have been inconsistent in raising their dividends. However, they have increased the dividends over the years. The 5 and 10 year growth in dividends is at 3.28% per year and 1.63% per year, respectively. The most recent increase was in 2012 and the increase was only for 1.72%.

Lately the company has been paying out more in dividends than it has earned. The 2012 financial year was not good for this company. It suffered a loss in the second quarter that dominated the year and it ended the year with an EPS loss. See an article in the Financial Post.

It is expected that the Dividend Payout Ratio for earnings for this year and 2014 will be around 150%. This is certainly a negative for this stock. However, it is in better shape when looking at the DPR for cash flow, where the 5 year median DPR is 32%. The DPR for CF was higher in 2012 at 52%, but it is expected to go to 36% and 34% for 2013 and 2014. Dividends are not expected to change over the next two years.

Shareholders have not made much on this stock over the past 5 and 10 years. Over the past 5 years there was total return loss of 9.86% per year with a capital loss of 14.63% per year and dividends at 4.77% per year. Over the past 10 years shareholders would have made a total return of 5.3% per year, with a capital loss of 1.23% per year and dividends at 6.53% per year.

Outstanding shares have increased over the past 5 and 10 years at4.9% and 4.1% per year, respectively. Shares have increased due DRIP, Stock Options and Share Issues. In the past there has also been some share buy backs.

The company has not done much to increase its revenue over the past 5 and 10 years. Revenue is down 4% per year over the past 5 year and is up by only 2.23% per year over the past 10 years. Revenue per Share is down by 8.45% per year and 1.84% per year over the past 5 and 10 years, respectively. Revenue is expected to increase modestly over the next couple of years.

Cash Flow per Share is also down with CFPS down 10.4% and 2.9% per year over the past 5 and 10 years, respectively. Book Value per share is also down with BVPS down 5.2% and 3.4% per year over the past 5 and 10 years. None of this is good. However, CFPS is expected to rise this year and next.

Generally speaking the Return on Equity tends to be fine. Since 2012 had an earnings loss there is no ROE for this stock for 2012.

The Liquidity Ratio tends to be rather low, but this company has a good cash flow. The Debt Ratio is fine at 1.55. The Leverage and Debt/Equity Ratios are a bit high at 4.24 and 2.74, but utility companies tend to have rather high Leverage and Debt/Equity Ratios.

A number of analysts feel that this stock has now bottomed out and hopefully this is true. It has been a rough year for this company. Last year was no better. See my reports from last year, report 1 or report 2.

Hopefully 2013 will be a better year for this company. However, so far the stock is still tracking south.

TransAlta is a power generation and wholesale marketing company. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta's focus is to efficiently operate our biomass, geothermal, wind, hydro, natural gas and coal facilities in order to provide our customers with a reliable, low-cost source of power. Its web site is here TransAlta. See my spreadsheet at ta.htm.

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 for stocks followed and investment notes. Follow me on Twitter or StockTwits.