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.
When I was updating my spreadsheet, I noticed that the stock has not done well over the past 5 years. It hit highs in 2013 and 2014 which has not be able to get back to. It did well in 2018 and they have been increasing the dividend at a higher rate than in the past until this year.
The dividend yield has varied over the years, but it is in the moderate range. The current dividend yield is 4.62%, with 5, 10 and historical yields at 3.69%, 3.16% and 3.67%. They are rising the dividend in the 10% range from 2014 to 2018, but the most recent dividend rise was for 7.5% and it was in 2019. They tend to raise the dividends at the beginning of each year.
The Dividend Payout Ratios are currently fine. The DPR for EPS for 2018 was 76% with 5 year coverage at 70%. The DPR for CFPS for 2018 was 19% with 5 year coverage also at 19%.
Debt Ratios are fine, but like a lot of utility, they have a lot of debt. The Long Term Debt/Market Cap Ratio for 2018 is too high at 1.15. The main reason for the high ratio is the drop in stock price. The current ratio is lower at 0.97. The Liquidity Ratio is low at 1.15 for 2018. If you add in cash flow after dividends, the ratio becomes 1.66. The Debt Ratio is also lower than what I like at 1.43 with 5 year median better at 1.51. Leverage and Debt/Equity Ratios are high at 3.33 and 2.33 respectively with the 5 year coverage better at 2.92 and 1.92.
The Total Return per year is shown below for years of 5 to 28 to the end of 2018. 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.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 10.15% | 1.29% | -2.57% | 3.86% |
| 2008 | 10 | 8.99% | 8.62% | 4.46% | 4.16% |
| 2003 | 15 | 7.80% | 9.42% | 5.29% | 4.13% |
| 1998 | 20 | 6.95% | 8.78% | 4.91% | 3.87% |
| 1993 | 25 | 6.14% | 11.35% | 6.55% | 4.79% |
| 1990 | 28 | 5.61% | 11.88% | 6.70% | 5.18% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.91, 17.34 and 15.56. The corresponding 10 year ratios are 14.35, 16.00 and 17.76. The corresponding historical ratios are 11.08, 14.02 and 15.82. The current P/E Ratio is 16.79 based on a stock price $36.60 and 2019 EPS estimate of $2.18. This stock price testing suggests that the stock price is reasonable but above the median.
I get a Graham Price of $29.64. 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 1.23 base on a stock price of $36.60. This stock price testing suggests that the stock price is reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 2.19. The current P/B Ratio is 2.04 based on a Book Value of $4,892M, Book Value per Share of $17.91 and a stock price of $36.60. The current ratios is 6.8% below the 10 year ratio. This stock price testing suggests that the stock price is reasonable and below the median.
I get an historical median dividend yield of 3.67%. The current dividend yield is 4.62% based on dividends of $1.69 and a stock price of $36.60. The current yield is 26% below the historical yield. This stock price testing suggests that the stock price is reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 2.66. The current P/S Ratio is 2.43 based on 2019 Revenue estimate of $4,113M, Revenue per Share of $15.06 and a stock price of $36.60. The current ratio is 8.6% below the 10 year ratio. This stock price testing suggests that the stock price is reasonable and below the median.
Results of stock price testing suggests that the stock price is reasonable and below the median. Some of what I have been reading is that the stock price is high, but my testing suggests otherwise. All my test except for the P/E Ratio suggests that the stock price is reasonable and below the median. However, I must admit that the stock price has gone no where lately and my total return over the past 2 years that I have owned this stock is only 2.02%.
When I look at analysts’ recommendations, I find Buy (2) Hold (7). The consensus would be a Hold. The 12 month stock price is $37.88. This implies a total return of 8.12% with 3.50% from capital gains and 4.62% from dividends.
See what analysts are saying on Stock Chase. Mainly they say that the company is interest sensitive. Amy Legate-Wolfe on Motley Fool says that the stock is overpriced, so buy on a dip. A writer on Simply Wall Street says that the company has served its shareholders reasonably well. A writer on Simply Wall Street does not like the fact that dividends are growing but EPS is not. The blogger Passive Canadian Income talks about why he bought some of this stock last year.
Canadian Utilities Ltd, a subsidiary of holding company Atco, offers gas and electricity services. The company's main divisions include electricity (generation, transmission, and distribution), pipelines and liquid (natural gas and water), and Corporate and others. Headquartered in Calgary, Alberta, the firm mainly operates in Canada and Australia, along with some operations in the United States, United Kingdom, and Mexico. Its web site is here Canadian Utilities Ltd.
The last stock I wrote about was about was Ag Growth International (TSX-AFN, OTC-AGGZF) ... learn more. The next stock I will write about will be Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF) ... learn more on Wednesday, May 15, 2019 around 8 am. Tomorrow on my other blog I will write about Buy Backs.... learn more on Tuesday, May 14, 2019 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.
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