TransCanada Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. You would think with the recent drop in price that this stock's price would test as cheap, but it is not. It is basically reasonable but above the median. See my spreadsheet on TransCanada Corp.

I own this stock of TransCanada Corp (TSX-TRP, NYSE-TRP). I bought the stock in 2000 at an opportune time. The company had been cutting their dividend payments in order to re-organize and get the company into shape for long term profitability. This company's stock fell hard because of this. People who depend on dividends for their income can be an unforgiving lot and can get really upset at company when a trusted company cuts dividends.

I have 27 years of dividend data and they paid dividends in each year. They did decrease the dividends in 2000, but started to raise them again in 2001 and have increased their dividends every year since. I have made several purchases since 2000 and I have total return of 10.48% per year with 5.51% per year from capital gains and 4.97% per year from dividends.

Dividends are in the good range and the dividend increases are low. The current dividend yield is 4.94% with 5, 10 and historical median dividend yields are 3.93%, 4.06% and 4.28%. The dividend yield has sometimes been in the moderate range (2 and 3% range). The dividend growth over the past 5, 10, 15, 20, 25 and 27 years is at 7.00%, 6.02%, 6.13%, 3.70%, 4.67% and 4.79% per year. For the stock I bought in 2000 my yield is 22.44% on my original cost.

In most years they have covered their dividends with earnings, but they had an earnings loss in 2015 and low earnings in 2016 where dividends were not covered. The 2017 Dividend Payout Ratio is 71.14% with 5 year coverage at 155.65%. The DPR for cash flow for 2017 is 39.08% with 5 year coverage at 34.95%. It is not uncommon for any stock to have a couple of bad earnings years.

Total Return over the years has been mostly quite good. I consider around 8% per year to be a good Total Return. The Total Return on this stock has been over the past 5, 10, 15, 20, 25 and 27 years at 9.38%, 7.91%, 11.19%, 6.53%, 9.30% and 9.01% per year. The portion of this Total Return attributable to capital gain is 5.41%, 4.20%, 6.76%, 3.31%, 5.04% and 4.86% per year. The portion of this Total Return attributable to dividends is 3.98%, 3.70% , 4.42%, 3.22%, 4.25% and 4.15% per year.

The 5 year low, median and high median Price/Earnings per Share Ratios are 18.18, 19.58 and 20.99. The corresponding 10 year ratios are 17.80, 19.10 and 20.74. The historical ratios are 12.31, 14.06 and 16.03. The current P/E Ratio is 16.08 based on a stock price of $53.07 and 2018 EPS estimate of $3.30. This stock price testing suggests that the stock price is relatively cheap.

However the P/E Ratios for the last 5 and 10 years are rather high for a utility stock. The current one is 16.08 is probably moderate for such a stock. It is not a cheap P/E Ratio.

I get a Graham Price of $42.12. The 10 year low, median and high median Price/Graham Price Ratios are 1.23, 1.38 and 1.46. The current P/GP Ratio is 1.26 based on a stock price of $53.07. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Book Value per Share Ratio is 2.00. The current P/B Ratio is 2.22 based on Book Value of $21.059M, Book Value per Share of $23.89 and a stock price of $53.07. The current P/B Ratio is some 11% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10 year median Price/Sales (Revenue) Ratio is 3.40. The current P/S Ratio is 3.99 based on 2018 Revenue estimate of $11,712M, Revenue per Share of $13.29 and a stock price of $53.07. The current P/S Ratio is some 17% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

When I look at analysts' recommendations I find Strong Buy (4), Buy (8) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $69.45. This implies a total return of 36.07% with 5.20% from dividends and 30.86% from capital gains based on a current stock price of $53.07.

The company via The Canadian Press and CTV News advised that the recent U.S. tax ruling that eliminated a tax break for owners of certain interstate pipelines will have no material impact on its operations.. Jacob Donnelly of Motley Fool says why he likes this stock. See what analysts are saying about this stock on Stock Chase. They mostly like it.

TransCanada Corp is an energy infrastructure company. Its business segments include, Natural Gas Pipelines, Liquid Pipelines and Energy. The company has pipeline and power generation assets in Canada, the United States, and Mexico. Its web site is here TransCanada Corp.

The last stock I wrote about was about was TransAlta Corp (TSX-TA, NSYE-TAC)... learn more. The next stock I will write about will be AltaGas Ltd (TSX-ALA, OTC-ATGFF)... learn more on Friday, March 23, 2018 around 5 pm. Tomorrow on my other blog I will write about Bond Investments... learn more on Thursday, March 22, 2018 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.