Monday, November 24, 2014

Keyera Corp.

On my other blog I am today writing about how I did in the October 2014 market correction.

I do not own this stock of Keyera Corp. (TSX-KEY, OTC-KEYUF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited.

This company only paid one special dividend so far and that was in 2009. However, they are a dividend growth company. Dividends are moderate as are the dividend increases. The current dividend yield is 2.81%. The 5 year median dividend yield is much higher at 6%, but this is because this company was an income trust company until 2010.

Their 5 and 10 year dividend growth is at 6.2% and 7.5% per year over the past 5 and 10 years. The most recent increase was for 2014 and it was for 7.5%. The company stopped increasing the dividends in one year, 2010, when they were transiting from an income trust to a corporation. Analysts do expect dividend increases to continue.

The Dividend Payout Ratios have been a little too high for a corporation, but they are coming down. The 5 year median DPR for EPS is 99.5% and for CPFS is 53.5%. The corresponding ones for 2013 was 120% for EPS and 50% for CFPS. They are expected to move lower and the corresponding ones for 2014 is expected to be 80% for EPS and 44% for CFPS. DPRs for corporations are lower than those of income trusts.

Shareholders have done well with this stock. The 5 and 10 year total return is at 35.53% and 26.47% per year with 30.27% and 20.36% per year of this total return from capital gains and 5.26% and 6.11% per year of this total return from dividends. I would expect future total return to be lower.

It was expected that the dividend yield on income trusts companies would be lowered caused by dividend cuts and/or stock price increases. This stock used to have dividend yields north of 10% and the current one is 2.8%. The change happened wholly due to stock price increases. This reason for stock price increases is not likely to happen again. Also, the dividend portion of the total return was at 5.26% and 6.11% per year but again dividend is now 2.81%, but the dividend portion of the total return will also be lower in the future.

Outstanding shares have increased by 4.7% and 16.6% per year over the past 5 and 10 years. This makes the per share values more important to shareholders. The growth in revenue is from ok to good, the growth in cash flow is quite good but the growth in earnings is down over the past 5 years, but up quite well over the past 10 years.

Revenue is up by 8.5% and 17.9% per year over the past 5 and 9 years. The growth in Revenue per Share is up by 3.7% and 13.1% per year over the past 5 and 9 years. Earnings per share is down by 6.5% and up by 9.4% per year over the past 5 and 9 years. Net income is down by 2.4% and up by 33% per year over the past 5 and 10 years.

Analysts do expect a good increase in EPS for 2014 and the third quarterly report supports this. Analysts expect EPS to increase around 67% for 2014. If you compare the 12 month period ending in September 2014 to the 12 month period ending in December 2013, EPS is up 55%.

Cash flow has had the best growth with the cash flow up by 20.5% and 21.9% per year over the past 5 and 9 years and CFPS up by 15% and 17% per year over the past 5 and 9 years.

The Return on Equity has been over the 10% each of the past 5 years. The ROE for 2013 was at 15.9% and the 5 year median is also at 15.9%. The comprehensive income and net income has been the same since they start to report comprehensive income in 2006. Comprehensive income ROE basically suggests that ROE on net income is of good quality.

All the debt ratios have varied but have generally been good over the past 3 years with the Liquidity Ratio sometimes a bit low and the Leverage and Debt/Equity Ratios a bit high. The Liquidity Ratio for 2013 was at 1.64 and it has a 5 year median value of 1.36. The Debt Ratio for 2013 was at 1.43 and it has a 5 year median value of 1.50. The Leverage and Debt/Equity Ratios for 2013 were at 3.30 and 2.30 and these ratios have a 5 year median of 2.46 and 1.46, respectively.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock. Analysts expect that 2014 will be a good year for this company and certainly the third quarter results are pointing in that direction. See my spreadsheet at key.htm.

This is the first of two parts. The second part will be posted on Tuesday, November 24, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera.

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.

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

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