I do not own this stock Canadian Utilities Ltd (TSX-CU, OTC-CDUAF). This stock is on the Dividend Achievers list, the Dividend Aristocrats list and was also on Mike Higgs’ dividend growth list.
The current dividend is 2.76% on a stock price of $35.20. The 5 year median and 10 year median dividend yields are 3.12% and 3.01%. So the dividend is moderate as is the dividend increases. The growth in dividends over the past 5 and 10 years is at 7.2% and 6.1% per year. The most recent increase is 9.5% which occurred in 2013.
One way of looking at dividend stock is to see what you will be earning on your original purchases price in 10, 15 or 20 years. This can be important if you are building a dividend stock portfolio for your future. On this stock, you can probably count on around 7.5% or a 10% return on your original investment after 15 or 20 years.
The total return on this has been quite good over the past 5 and 10 years, with total return to the end of 2012 of 11.92% and 14.13% over these periods. The dividend portion of this return is at 2.75% and 3.25% per year over these periods and the capital gain portion of this year is at 9.17% and 10.88% per year over these periods.
The number of outstanding shares has not grown over the past 5 and 10 years. Shares have increased due to Stock Options and Share Issues and shares have decreased due to Buy Backs. Over the past 5 and 10 years revenue has not done much, but there is decent growth in earnings and better growth in cash flow.
There is no growth in revenue over the past 10 years. Revenue over the past 5 years looks to have growth because 5 years ago was not a good year. However, if you look at 5 year growth using the 5 year running averages, you are back to no growth.
The Liquidity Ratio has varied over time. It has generally been good, but not always. Utilities tend to have a lot of debt. The Liquidity Ratio for 2012 was just 1.20, but if you add in cash flow less dividends it is at 2.48. Utilities do tend to have rather steady cash flow. The Debt Ratio has also varied and the one for the year ending in 2012 was 1.48. The Leverage and Debt/Equity Ratios are fine for a utility at 3.07 and 2.07.
The Earnings per Share growth over the past 5 and 10 years is at 6% and 5.6% per year. The Cash Flow per Share growth over the past 5 and 10 years is 14.8% and 11.33% per year. For both of these per share values the 5 year running averages growth is not quite as good, but not far behind.
The Return on Equity is quite good with the ROE for 2012 at 13.3%. However, the ROE on comprehensive income for 2012 is quite a bit lower at 9.6% a 28% drop. The ROE on net income and comprehensive income does tend to vary with the ROE on comprehensive income usually being lower with a median difference of 5%. This could mean that the net income is not quite as good as it appears. It is just a warning.
This stock is a good utility stock. The one thing that investors may or may not see as a negative is that the stock on the TSX is for non-voting stocks. Most of the voting stock is owned by ATCO. You would not buy both this stock and ATCO for your portfolio. See my spreadsheet at cu.htm.
This is the first of two parts. Second part will be posted on Wednesday, September 25, 2013 and will be here.
Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. Its web site is here Canadian Utilities.
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.
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