I 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.
I bought this stock last year and it has only gone down since my purchase. It is already down by 15% this year.
Dividend yield is good, but have been getting higher as the stock price drops. The 5, 10 and historical median dividend yields are 3.20%, 3.12% and 3.67%. The current dividend is 4.96%.
The Dividend Payout Ratio has been higher recently (since 2015) compared to historical ratios. Historical ratios were generally 50% or lower. The DPR for 2017 was 93% with 5 year coverage at 64%. The DPR is expected to go back down starting the year. DPR for CFPS is good with the ratio in 2017 at 30% and the 5 year coverage at 19%.
The Total Return is show below for years of 5 to 27. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below. The total return has been lower over the past 5 and 10 years than it was in the past. The lowest growth is for the past 5 years. Over the long term they have delivered good returns for shareholders.
| Years | Div. Gth. | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 10.07% | 4.02% | 0.79% | 2.63% |
| 10 | 8.63% | 8.17% | 4.89% | 3.85% |
| 15 | 7.40% | 11.22% | 7.41% | 9.46% |
| 20 | 6.71% | 10.43% | 6.73% | 15.48% |
| 25 | 5.79% | 13.22% | 8.28% | 6.01% |
| 27 | 5.45% | 12.41% | 7.66% | 5.31% |
The 5 year low, median and high median Price/Earnings per Share Ratios are 16.11, 17.98 and 19.84. The corresponding 10 year ratios are 14.35, 15.76 and 17.51. The historical ratios are 10.93, 13.77 and 15.81. The stock price has not been declining as fast as the EPS. The current P/E Ratio is 14.41 based on a stock price of $31.70 and 2018 EPS estimate of $2.20. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $29.42. The 10 year low, median and high median Price/Graham Price Ratios are 1.13, 1.26 and 1.42. The current P/GP Ratio is 1.08 based on a stock price of $31.70. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share of 2.19. The current P/B Ratio is 1.81 based on Book Value of $4,471M, Book Value per Share of $17.49 and a stock price of $31.70. The current P/B Ratio is some 17% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.67. The current dividend yield is 4.96% based on dividends of $1.57 and a stock price of $31.70. The current yield is some 35% above the historical median yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 2.66. The current P/S Ratio is 2.19 based on 2018 Revenue estimate of $3,918M, Revenue per Share of $14.45 and a stock price of $31.70. The current ratio is some 17.5% below the year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
When I look at analysts' recommendations I find Buy (1) and Hold (7). The 12 month stock price consensus is $37.14. This implies a total return of 22.13% with 17.16% from capital gains and 4.96% from dividends.
Gordon Kent on Edmonton Journal talks about problems in shutting down coal-fired power plants in Alberta. The company posted news about its first quarterly results for 2018 on Globe News Wire. Dividend Channel has said that this stock is in their Top 25 dividend stock in a NASDAQ article. See what analysts are saying about this stock on Stock Chase. They note problems with rising interest rates.
Canadian Utilities Ltd is engaged transmission and distribution of electricity and natural gas. The company is also involved in power generation and sales, natural gas gathering, processing, storage and liquids extraction. Its web site is here Canadian Utilities Ltd.
The last stock I wrote about was about was Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF)... learn more. The next stock I will write about will be Hammond Power Solutions Inc. (TSX-HPS, OTC-HMDPF)... learn more on Monday, May 14, 2018 around 5 pm.
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Perhaps it's a good time to purchase some CU or do you think it will still be affected negatively by rising interest rates? In your opinion, how should one approach purchasing utilities and telecoms in this environment? I am a new and young investor investing for the long term.
ReplyDeleteWhy it is affected by interest rates is because of high debt levels. However high debt levels are common for utilities.
ReplyDeleteOn one hand purchasing good stock when they are cheap greatly affects your long term returns. On the other hand purchasing companies when they are cheap is a risk. It is a trade off.
I am not selling my stock but I understand the risk I am taking. I have invested for the long term and most things I have bought have paid me well. I have had some losses but overall my gains have been much higher than any loss.