ATCO Ltd.

On my other blog I am today writing about possible cheap dividend stocks for September 2014 continue... I do not own this stock of ATCO Ltd. (TSX-ACO.X, OTC-ACLLF). This is a dividend paying stock that is on everyone's list. This stock is on the Dividend Achievers list, the Dividend Aristocrats list at and also was on Mike Higgs' list.

The dividend is moderate and the growth is fairly good. The current dividend yield is 1.84% and the 5 year median dividend yield is 1.88%. The 5 and 10 year dividend growth is at 9.8% and 8.9% per year. The most recent dividend increase was for 2014 and it was for 14.7%. In fact the last three dividend increases has been around this higher value.

The Dividend Payout Ratios are quite good with 5 year median rates at 20.5% for EPS and 4.6% for CFPS. The corresponding DPR for 2013 are at 24.9% for EPS and 4.6% for CFPS.

There has been no growth in outstanding shares over the past 5 and 10 years. Shares have increased due to Stock Options and they have decreased due to Buy Backs. The one problem I see for this stock is that the growth in EPS and Cash Flow is much higher than the growth in revenue over the last 5 and 10 years. The company must increase their revenue or growth in earnings and cash flow must fall.

Revenue per Share has grown at 6% and 1.4% per year over the past 5 and 10 years. The 5 and 10 year growth using 5 year running averages is not much different at 5.2% and 2% per year over the past 5 and 10 years. The EPS has grown at 9.2% and 12.8% per year over the past 5 and 10 years. Cash Flow per Share has grown at 15% and 12.9% per year over the past 5 and 10 years.

The shareholders of this stock have done well in total return over the past 5 and 10 years. The total return over the past 5 and 10 years is at 17.28% and 14.51% per year. The portion of this total return attributable to capital gains is at 15.11% and 12.30% per year. The portion of this total return attributable to dividends is at 2.17% and 2.21% per year.

The Return on Equity has been over 10% each year of the past 10 years. The ROE for 2013 is at 14.6% and the 5 year median ROE is also 14.6%. The ROE for comprehensive income for 2013 is at 18.3% and its 5 year median is at 13.1%.

The debt ratios are fine, with the Liquidity Ratio a bit low as they depend on cash flow to get a good Liquidity Ratio. The Liquidity Ratio for 2013 is at 1.38 and with the cash flow after dividends at 2.94. The Debt Ratio is good at 1.60. The Leverage and Debt/Equity Ratios are fine at 2.66 and 1.66.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock. As I point out above, revenue is growth faster than earnings and cash flow. However, analysts do see better growth in revenue over the next few years, but there was not much grown to the end of the second quarter in 2014. See my spreadsheet at aco.htm.

This is the first of two parts. The second part will be posted on Thursday, September 04, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. Its web site is here ATCO.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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