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 I have had this stock for 4 years and my total return is low, although the yield in dividends have been good. I have a total return of 1.30% with 4.35% from dividends and 3.05% capital loss. I note that total return over the past 15 years has been low. See chart below. At the moment, I am happy to collect my increasing dividends and hold this stock. My portfolio is meant to produce dividends from a variety of companies.
Also, when updating my spreadsheet, I noticed I included what the dividend yield would be on your original investment after 5 and 10 years if you paid the high price or the low price 5 or 10 years ago. If you paid the high price 5 years ago your current yield would be 4.37%, but if you paid the low price 5 years ago, your yield would be 5.73%. This is a difference of 1.36%. If you paid the high price 10 years ago your current yield would be 7.19%, but if you paid the low price 10 years ago, your yield would be 10.01%. This is a difference of 2.82%. It would seem to pay to try to get a low or reasonable price when buying stocks for long term return.
The dividend yields are moderate with dividend growth current low. The current dividend yield is moderate (2% to 4% ranges) at 4.96%. The 5, 10 and historical median dividend yields are also moderate at 4.73%, 3.43% and 3.74%. The current dividend growth is in the moderate range (8% to 14% ranges) at 8.10% per year over the past 5 years. However, the last dividend increase was for just 1% in 2021. The dividends increase for 2020 was also much lower at 3%. So the dividend increases have gone low lately.
The Dividend Payout Ratios (DPR) could be improved and will probably improve. The DPR for EPS for 2020 was 132% with 5 year coverage at 76%. The DPR for EPS is expected to be better this year at 87% with 5 year coverage at 80% and is expected to decline in the following year to. The DPR for CFPS for 2020 is 29% with 5 year coverage at 24%. A DPR for CFPS of 40% or less is a good value. The DPR for Free Cash Flow for 2020 is 64% with 5 year coverage at 141%.
Debt Ratios are fine. The Long Term Debt/Market Cap ratio for 2020 is 1.05 and too high. The current one is 0.92. This is a function of the stock price and it was depressed last year. The Liquidity Ratio is quite good 1.82. The Debt Ratio is fine at 1.50. The Leverage and Debt/Equity Ratios for 2020 are 2.98 and 1.98 and are fine.
The Total Return per year is shown below for years of 5 to 32 to the end of 2020. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 8.10% | 4.33% | -0.54% | 4.86% |
| 2010 | 10 | 8.72% | 5.58% | 1.35% | 4.23% |
| 2005 | 15 | 7.99% | 6.21% | 2.34% | 3.88% |
| 2000 | 20 | 7.00% | 8.83% | 4.56% | 4.28% |
| 1995 | 25 | 6.45% | 11.79% | 6.46% | 5.33% |
| 1990 | 30 | 5.58% | 11.66% | 6.21% | 5.45% |
| 1988 | 32 | 5.34% | 11.29% | 5.94% | 5.36% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.91, 17.24 and 19.56. The corresponding 10 year ratios are 14.74, 16.62 and 18.75. The corresponding historical ratios are 10.78, 13.00 and 15.07. The current P/E Ratio is 17.56 based on a stock price of $35.47 and EPS estimate for 2021 of $2.02. The current P/E Ratio is between the median and high 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $29.49. The 10 year low, median, and high median Price/Graham Price Ratios are 1.13, 1.31 and 1.45. The current P/GP Ratio is 1.20 based on a stock price of $35.47. The current ratio is between the low and median 10 year median ratios. This stock price testing suggests that the stock price is relatively 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 1.85 based on a stock price of $35.47, Book Value of $5,220M, and a Book Value per Share of $19.13. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.10. The current P/CF Ratio is 5.81 based on CFPS estimate for 2021 of $6.10, Cash Flow of $1,664M, and a stock price of $35.47. The current ratio is 5% 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 3.74%. The current dividend yield is 4.96% based on dividends of $1.76 and a stock price of $35.47. The current dividend yield is 33% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.43%. The current dividend yield is 4.96% based on dividends of $1.76 and a stock price of $35.47. The current dividend yield is 45% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 2.75. The current P/S Ratio is 2.82 based on Revenue estimate for 2021 of $3,430, Revenue per share of $12.57, and a stock price of $35.47. The current ratio is 3% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. The dividend tests say the stock price is cheap and they may be right as dividend payments and increases show the confidence in the future of the management. However, the last increase was for just 1%. They are probably doing the increase because they have over a 40 year history of dividend increases. The P/S Ratio for 2022 is 1% below the 10 year median ratio. Most of the other testing is showing the stock price as reasonable and below the median.
Is it a good company at a reasonable price? I still like this stock for the dividends. It would be nice to also have some capital gains. The stock price is probably reasonable. They have expectations of a good future as show in their February 2021 report on 2020. See link below.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), Hold (6) and Sell (1). So, it is a rather mixed bag. The consensus would be a Hold. The 12 month stock price consensus is $35.86. This implies a total return of 6.06% with 1.10% from capital gains and 4.96% from dividends. Most of the total return is again expected from dividends.
Two analysts lately gave it a weak buy on Stock Chase. They talk about it being from Alberta. Sneha Nahata on Motley Fool talk about this stock as a safe dividend stock for a growing dividend. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and lists 4 risks. A writer on Simply Wall Street talks about recent insider selling. A writer on Simply Wall Street talks about dividends growing, but the EPS has not been growing. The Blogger Dividend Earner reviewed this stock in February 2021. The title of Don’t Be FOOLED by CU’s Long Streak of Dividend Increases is provocative, but there is nothing in the review that I could find to suggest their dividend increases will stop. In February 2021, Canadian Utilities Ltd reported on their 2020 results and what they expect in the future.
Canadian Utilities Ltd offers comprehensive solutions and service excellence in: Energy Infrastructure, electricity generation, transmission, and distribution; natural gas transmission, distribution, and infrastructure development; energy storage and industrial water solutions; and electricity and natural gas retail sales and Retail Energy, energy plans for homes, businesses, and industry. Its web site is here Canadian Utilities Ltd.
The last stock I wrote about was about was Mullen Group Ltd (TSX-MTL, OTC-MLLGF) ... learn more. The next stock I will write about will be Pizza Pizza Royalty Corp (TSX-PZA, OTC-PZRIF) ... learn more on Tuesday, May 25, 2021 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.
No comments:
Post a Comment