Canadian Utilities Ltd

Sound bite for Twitter and StockTwits is: Price is reasonable. The price is reasonable if you use the sort of testing I prefer of P/B Ratios and dividend yields. I find them better as you get rid of temporary distortions (i.e. lower than usual EPS) and they do not use estimates. See my spreadsheet on Canadian Utilities Ltd.

I do not own this stock of Canadian Utilities Ltd. (TSX-CU, OTC-CDUAF). I started to follow this stock in January of 2009 because it was on the Dividend Achievers list, the Dividend Aristocrats list and was also on Mike Higgs' dividend growth list at that time. The Dividend Aristocrats list is now an index on the TSX. ATCO (TSX-ACO-X) owns 88% of this stock, so you would not buy both these stocks. Canadian Utilities has hiked its dividend each year for over 40 years.

The dividend yield is moderate with moderate dividend growth. The current dividend is 3.5%, the 5 year median dividend yield is 2.8% and the historical median dividend yield is 3.7%. The 5 and 10 year growth of dividends is at 9.3% and 7.9% per year. The last dividend increase was this year and it was for 10.2%.

If you had held this stock for 5, 10 or 15 years, the dividends would have covered 19.1%, 42.6% or 93.4% of the cost of your stock if you paid a median price for it. If you had held this stock for 5, 10 or 15 years, the dividends on your original purchase price would be 4.6% 6.2% or 10.3% if you paid a median price for it.

Revenue growth is weak, but cash flow growth is strong. The Revenue per Share growth over the past 5 and 10 years is at 3% and 2.1% per year. The Cash Flow per Share growth is at 15.1% and 8.65 per year over the past 5 and 10 years.

They are not bad in the debt ratios category. The Liquidity Ratio is low at 1.32, but if you add in cash flow after dividends this ratio becomes 2.95. The Debt Ratio is 1.52. Leverage and Debt/Equity Ratios for 2015 is 2.92 and 1.92.

The Return on Equity is low in 2015 at just 7.8%, but the 5 year median is 15.9% and the ROE has been above 10% 9 of the past 10 years. Also, the comprehensive income ROE for 2015 is 10.7% which implies that the company might have done better in earnings that the net income suggests.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.56, 15.99 and 17.59. The corresponding 10 year values are 13.78, 15.65 and 17.51. The corresponding historical values are 10.73, 13.30 and 15.55. The current P/E Ratio is 18.54 based on a stock price of $37.26 and 2016 EPS estimate of $2.01. This stock price testing suggests that the stock is relatively expensive.

I get a Graham Price of $27.57. The 10 year low, median and high median Price/Graham Price Ratios are 1.12, 1.28 and 1.45. The current P/GP Ratio is 1.35. This stock price testing suggests that the stock price is relatively reasonable, but above the median.

I get a 10 year Price/Book Value per Share Ratio of 2.29. The current P/B Ratio is 2.22 a value some 3.3% lower. The current P/B Ratio is based on a stock price of $37.26 and a BVPS of $16.80. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The current dividend yield is 3.49% based on stock price of $37.26 and dividends of $1.30. The 5 year median dividend yield is 2.78% and the current yield is some 25% higher. (The 10 year median dividend yield is 2.81% and this is still below the current dividend yield.) The historical dividend yield is 3.71% and this is some 6% higher than the current dividend yield.

If you compare the current dividend yield to that of the last 5 and 10 years the stock price is relatively cheap. If you look at historical dividend yield the stock price is relatively reasonable but above the median.

When I look at analysts' recommendations, I find Hold and Underperform Recommendations. Most of the recommendations are a Hold and the consensus recommendation would be a Hold. The 12 month stock price is $40.83. This would imply a total return of 13.07% with 9.58% from capital gains and 3.49% from dividends based on a stock price of $37.26.

Demetris Afxentiou of Motley Fool likes this stock because it is regulated and this translate into guaranteed revenue. Camille Ainsworth at Fiscal Standard talks about analysts' recommendations on this stock. See what analysts think about this stock on Stock Chase. The blogger Dividend Growth Investing and Retirement talks about buying this stock and why. One thing he liked is that they have been growing their dividends for around 44 years.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see that report here.

The last stock I wrote about was about was Wajax Corp. (TSX-WJX, OTC- WJXFF)... learn more . The next stock I will write about will be Canyon Services Group (TSX-FRC, OTC-CYSVF)... learn more on Wednesday, September 28, 2016 around 10 am. Tomorrow on my other blog I will write about Money Show 2016 - Mark Mills... learn more on Tuesday, September 27, 2016 around 5 pm.

Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. Its web site is here Canadian Utilities Ltd.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.