Parkland Fuel Corp.

On my other blog I am today writing Dividends Covering a Stock's Cost continue...

Sound bite for Twitter and StockTwits is: Dividend Growth Energy Stock. See my spreadsheet at pki.htm.

I do not own this stock of Parkland Fuel Corp. (TSX-PKI, OTC- PKIUF). I decided to do a spreadsheet on this stock as it was a stock recommended by Roger Conrad in Money Show 2013.

This is another old income trust company that converted to a corporation in 2010. At that time it decreased its dividend by some 19%. Since then it has been modestly increasing their dividends. Dividends are up by around 1.7% per year. The last increase was in 2015 and it was for 1.9%. Dividend increases were higher prior to 2010 and the 10 years dividend growth is at 6.3% per year. This is even after the dividend cut and the low growth in dividends since 2010.

This stock had quite high dividends in the past and has an historical high dividend yield at around 21%. It was felt that the old income trust stocks would end up, after dividends cuts and/or stock increases, with dividends in the 4 to5% range. This stock current has a dividend at 4.25%.

It would appear that this company is paying out too much in dividends at the current time. The 5 year Payout Ratios for EPS is 142%. The 5 year Payout Ratio for EPS is much better at 62%. However, the EPS Payout Ratio is mitigated by two things. The first is the rapid increase in shares which means that dividend payout increases as the year advances. The other is under DRIP where extra shares are given in place of cash. If you look strictly at cash paid in dividends then in 2014 the company paid out only 49% of their net income in cash dividends.

Shareholders have done quite well in this company over the past 5 and 10 years. The 5 and 10 year Total Return is at 24.07% and 27.24% per year. The portion attributed to capital gain is 17.18% and 14.36% per year. The portion attributed to dividends is 6.89% and 12.88% per year.

The future will not be the same for a couple of reason. This old income trusts shares have already increased due to the change to a corporation. Also, dividend yields are a lot lower. The current dividend yield is 4.25% compared to the past dividend yields for total return over the past 5 and 10 years of 6.89% and 12.88%.

Total return on dividend growth stocks tend to be equal to the growth in dividends plus the dividend yield. The current growth in dividends for 2015 was just 1.9%. The current dividend yield is 4.25%. This would suggest much lower total return over the next while. On the other hand this company expects to grow by acquisitions.

This company has increased their outstanding shares by 10.3% and 8.4% per year over the past 5 and 10 years. If I were a shareholder, I would be most interested in per share values. The growth in Revenue has been good. The growth in EPS is none to good and growth in Cash Flow is none to good.

The growth in Revenue is at 30% and 27% per year over the past 5 and 10 years. The growth in Revenue per Share is at 17.9% and 17.2% per year over the past 5 and 10 years. Analysts expect little growth in Revenue in 2015. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, Revenue is down by 8.4%.

EPS is down by 7.4% and up by 20% per year over the past 5 and 10 years. 2014 was not a good year for this company in terms of earnings. Analysts do expect good growth in EPS for 2014. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, EPS is down by 9.1%. So EPS is not yet going in the right direction.

Cash Flow is up by 8.1% and 15.8% per year over the past 5 and 10 years. However, CFPS is down by 25 and up by 6.8% per year over these periods. Analysts expect a decline in Cash Flow for 2015. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, Cash Flow is up by 59%. Cash flow is going in the right direction.

Return on Equity has been over 10% for each of the past 10 years expect for 2014 where the ROE was just 8.8%. The 5 year median ROE is 15.7%. The ROE from comprehensive income is a bit better for 2014 at 9.1%. The 5 year median ROE is also 15.7%. 2014 was not a good year for earnings for this company.

The debt ratios are fine except that the ones for Leverage and Debt/Equity Ratios are a bit high. The Liquidity Ratio is 1.92. The Debt Ratio is 1.59. I like any ratio of 1.50 and higher. Leverage and Debt/Equity Ratios for 2014 was 2.69 and 1.69. These ratios hit a peak in 2010 and have been falling ever since.

This is the first of two parts. The second part will be posted on Friday, July 3, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Parkland Fuel Corporation is a marketer and distributor of fuels, managing a nationwide network of sales channels for retail, commercial, wholesale and home heating fuel customers. Its web site is here Parkland Fuel.

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.