Wednesday, April 8, 2015

AltaGas Ltd.

On my other blog I am today writing about possible cheap dividend stocks for April 2015 continue...

Sound bite for Twitter and StockTwits is: Dividend growth utility stock. The dividend yield is good on this stock at just over 4%. 2014 was not a good year, but analysts think that there is will be a nice improvement in 2015. For any stock held over a long period, there will be ups and downs. I still think that the company has long term potential. See my spreadsheet at ala.htm.

I own this stock of AltaGas Ltd (TSX-ALA, OTC-ATGFF). When I bought this stock in 2009 it was on many dividend growth stock lists. In 2009, I saw that this stock also had good growth in Revenues, Earnings, Dividends, and Stock Prices over the last 5 and 10 years. The stock had a fairly strong balance sheet. I took a small position in this stock, and planned to wait and see how things go with this stock before buying more. I bought more in 2010 and 2012.

This company changed from an Income Trust to a Corporation in 2010 and reduced its dividend by 39%. Since then they have again been increasing their dividend but the current dividend is still some 18% lower than what it was in 2010. The last dividend increase was in 2014 and it was for 15.7%. This is a higher increase that occurred in 2012 and 2013. If you look at dividend growth it is up by 3.4% per year over the past 10 years, but is down by 5% per year over the past 5 year.

This is a dividend growth company with good dividends and generally moderate growth. The current dividend yield is 4.2% and the 5 year median dividend yield is 4.5%. Although the dividend growth in 2014 was good, the dividend increase in 2012 was 4.3% and 6.3% in 2013.

The Dividend Payout Ratios for 2014 was 225% for EPS and 47.7% for CFPS. The 5 year median ratios are 137% for EPS and 54% for CFPS. The EPS for 2014 was low and EPS is expected to be much higher in 2015. Analysts are looking at a DPR of 109% for EPS in 2015 if dividend does not change or 119% if it is increased again around 7.9%.

Also a number of people are still looking at Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) for this company. The DPR for FFO for 2014 is 45% and for AFFO is 42%. The company also gave out a normalized EPS value of $1.30 and the DPR for this EPS is 128%.

I have done well with this stock with a total return of 25.58% per year. The portion of this return attributable to dividends is 6.6% and to capital gain is 18.98%. I have had this stock for 5.8 years and my ACB is $22.16 and the dividend per share I have received is at $6.50.

The 5 and 10 years total return is a little less than I have received. The 5 and 10 year total return is 19.77% and 9.75% per year with 14.36% and 4.27% per year from capital gains and 5.41% and 5.48% per year from dividends.

Outstanding shares were increased by 10.8% and 9.7% per year over the past 5 and 10 years. This means that I as a shareholder am more interested in per share values. For revenue the growth is good, but for revenue per share, the growth is low. Cash Flow growth is also good, but CFPS growth is moderate. For earnings 2014 was a bad year and so there is moderate to low growth.

Revenue is up by 13.7% and 10.9% per year over the past 5 and 10 years. Revenue per Share is only up by 2.6% and 1.1% per year over the past 5 and 10 years. Cash Flow is up by 18.4% and 15.8% per year over the past 5 and 10 years. CFPS is up by 6.8% and 5.6% per year over the past 5 and 10 years.

For earnings, they down by 7.5% over the past 5 years and up by 3.8% per year over the past 10 years. Even looking at 5 year running averages, earnings and down by 2% per year over the past 5 years. 2014 was not a good year and EPS is down by 16% and 5.6% per year over the past 5 and 10 years. It also does not get much better looking at 5 year running averages as EPS is by this calculation down by 11% per year over the past 5.

The company has been putting out a normalized EPS value since 2005. This is meant to get rid of special items. This EPS value is quoted by some analysts. Still, this does not improve much as using these values NEPS is down by 5.1% and 5% per year over the past 5 and 9 years.

Growth in FFO and AFFO is the only earnings that give positive values. FFO per Share is up by 7.6% and 5.4% per year over the past 5 and 10 years. AFFO per share is up by 10.4% over the past 3 years. I can only find AFFO for this company from 2011.

The Return on Equity for 2014 is low at 2.7%. The 5 year median is just 6.1%. The ROE has not been above 10% for the last 5 years. The last year that it was above 10% is 2008. The comprehensive income for 2014 is better at 9.2%. This has a 5 year median of 7.6%. Comprehensive income has grown at 14.2% and 9.1% per year over the past 5 and 7 years. This has only been reported from 2007.

The debt ratios are good. The Liquidity Ratio for 2014 is 1.38. If you add in cash flow after dividends it rises to 1.69. The Debt Ratio for 2014 is 1.74. The Leverage and Debt/Equity Ratios for 2014 are 2.35 and 1.35. These are rather typical for a utility stock.

This is the first of two parts. The second part will be posted on Thursday, April 9, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is here AltaGas.

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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