Canadian Utilities Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. I moved up my review of this stock because I now own it. It is still relatively reasonably priced but not as reasonable has it been in the recent past. I prefer the P/P Ratio and dividend yield tests. See my spreadsheet on Canadian Utilities Ltd.

I own this stock of Canadian Utilities Ltd (TSX-CU, OTC-CDUAF). This is a dividend growth utility stock. 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. ATCO (TSX-ACO-X) owns 88% of this stock, so you would not buy both these stocks. I bought this stock in 2017.

This stock has a great reputation for increasing dividends which they have since 1973 which is over 40 years ago. Dividend yield has been moderate and the dividend increases have also been moderate. The current dividend is 3.58%, the 5 year median is 2.78% and the 10 year one is 2.98% with an historical median dividend yield of 3.67%. The 5 and 10 year dividend growth is at 10% and 8.5% per year. The last dividend increase was for 10% and it for 2017.

If the company continues to increase the dividends around 10% per year then in 5, 10 or 15 years you could be earning 5.76%, 9.28% or 14.95% on your purchase of today based on a stock price of $39.96.

The company is still off the highs it reached in 2015 because they have to close down all the coal plants they have in Alberta that is producing electricity. There was an article by Geoffrey Morgan in the Financial Post about this in 2015. However, after the company's stock hit bottom at the end of 2015, it has been on an upswing.

As with most utility companies, this company has a lot of debt. The level is not high enough for concern through. The Long Term Debt/Market Cap Ratio is 0.85. The Liquidity Ratio is low at 1.10, but if you add in cash flow after dividends, the ratio is a healthy 2.56. The Debt Ratio is good at 1.52. The Leverage and Debt/Equity Ratios are a bit high but rather typical of utilities at 2.93 and 1.93, respectively.

The Return on Equity is good. The 5 year median is 14.9% and the one for 2016 was 12.9%. It has only been below 10% once in the past 5 years and also once in the past 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.91, 17.24 and 19.56. The 10 year values are 13.98, 15.65 and 17.51. The historical values are 10.78, 13.51 and 15.79. The current P/E Ratio is 22.58 based on a stock price of $39.96 and 2017 EPS estimate of $1.77. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $27.32. The 10 year low, median and high median Price/Graham Price Ratios are 1.12, 1.26 and 1.41. The current P/GP Ratio is 1.46 based on a stock price of $39.96. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 2.25. The current P/B Ratio is 2.13 based on BVPS of $18.74 and a stock price of $39.96. The current P/B Ratio is some 5% lower than the 10 year median. This stock price testing suggests that the stock price is reasonable and below the median.

The historical median dividend yield is 3.67%. The current dividend yield is 3.58% based on dividends of $1.43 and a stock price of $39.96. The current dividend is some 3% below the historical dividend yield. This stock price testing suggests that the stock price is reasonable but above the median. It is close to the median though. Also the 5 year median is 2.78% and the 10 year one is 2.98%. The current dividend is a lot higher than the 5 and 10 year medians.

When I look at analysts' recommendations, I find Buy, Hold and Underperform Recommendations. Most of the recommendations are a Hold and the consensus is a Hold. The 12 month stock price is $41.57. This implies a total return of 7.61% with 4.03% from capital gains and 3.58% from dividends based on a current stock price of 39.96.

There is a press release on BOE Report about the company offering Preferred Shareholders a conversion option. Staff at the Benton Bulletin talk about some technical analysis. The company has a Piotroski F-Score of 7. Generally a stock with a high score of 8 or 9 would be seen as strong, and a stock scoring on the lower end between 0 and 2 would be viewed as weaker. See what analysts are saying about this stock on Stock Chase. They generally like this stock.

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.

The last stock I wrote about was about was Hammond Power Solutions Inc. (TSX-HPS, OTC- HMDPF)... learn more. The next stock I will write about will Mullen Group (TSX-MTL, OTC-MLLGF)... learn more on Tuesday, May 23, 2017 around 5 pm.

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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.