Keyera Corp.

On my other blog I am today writing about Money Show 2015 and the Stock Whisperer learn more...

Sound bite for Twitter and StockTwits is: Dividend Growth Infrastructure Utility stock. This stock which has only been on the TSX since 2003 has done well for its shareholders. See my spreadsheet on Keyera Corp.

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 writes for the Globe and Mail.

This is an old income trust stock. It stopped raising its dividend the year it changed to a corporation. After one year of no increases, the dividends were again increased. Dividend increases are a bit lower after the company changed to a corporation. The 5 and 10 years dividend growth is 6.8% and 8.7% per year.

The thing with high dividend yields, which for this company was between around 5% and 8% is that you do not have to wait long for dividends to cover the cost of your stock purchase. For this company after 10 years, the dividends covered 106% of the stock price if a median price was paid for the stock. If you are a small investor investing for dividends, you do not want to lose money. When dividend yields are high, it does not take long to cover the price of your stock.

The Dividend Payout Ratio was quite high from 2010 to 2013 being 100% or plus. The 5 year median DPR for EPS is 100%. However, this ratio was better in 2014 at 89.5% and it is expected to be around 90% in 2015. The DPR for CFPS is better with a 5 year median of 53% and the 2014 ratio at 39%.

The company still puts out and some analysts still follow the distributable cash for this company. This calculation has changed over the years and currently seems close to an AFFO calculation. In any even the DPR for AFFO is 53% in 2014 and its 5 year median value is 61%.

Shareholders have done well with this company. The 5 and 10 years total return to date is 21.98% and 18.91% per year. The portion of this total return attributable to dividends is at 4.73% and 5.30% per year. The portion of this total return attributable to capital gains is at 17.25% and 13.61% per year. Note that dividend yields have gone down with the change to a corporation. This calculation presumed current stock price is $38.95.

The outstanding shares have increased by 5.1% and 4.5% per year over the past 5 and 10 years. Shares have increased due to Debenture Conversions, DRIP and Share Issues. Revenue growth has been good. EPS growth has been moderate to good, as has the Distributable Cash growth. Cash Flow growth has been good.

Revenue has grown at 18.6% and 17.1% per year over the past 5 and 10 years. Revenue per Share has grown at 12.9% and 12.1% per year over the past 5 and 10 years. Analysts have expected Revenues to go down around 17% in 2015. However, if you look at the 12 month period to the end of 2014 and the 12 month period to the end of the third quarter, Revenue is up by 9.4%.

EPS has grown at 4.1% and 17.67% per year over the past 5 and 10 years. Analysts expect the EPS to grow at around 7% in 2015. However, if you look at the 12 month period to the end of 2014 and the 12 month period to the end of the third quarter, EPS is down by 11.4%. Distributable Cash has grown at 3% and 12% per year over the past 5 and 10 years.

Cash Flow has grown at 14.5% and 24.6% per year over the past 5 and 10 years. CFPS has grown at 9% and 19.2% per year over the past 5 and 10 years. Analysts expect cash flow to grow at 4.9% in 2015. However, if you look at the 12 month period to the end of 2014 and the 12 month period to the end of the third quarter, Cash Flow is down by 2.8%.

The Return on Equity has been above 10% each year of the past 5 years. The ROE for 2014 was 17.4% and its 5 year median is 15.9%. The ROE on comprehensive income is the same as for that on net income. This suggests that the earnings are of good quality.

The Liquidity Ratio is low and the company depends on cash flow for a margin of safety. The Liquidity Ratio for 2014 was 1.15 and if you add in cash flow after dividends it is 1.61. The Debt Ratio is fine and the value for 2014 was 1.52. The Leverage and Debt/Equity Ratios are a little high with the 2014 values at 2.92 and 1.92.

This is the first of two parts. The second part will be posted on Tuesday, November 24, 2015 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 Corp.

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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