Is it a good company at a reasonable price? Certainly, the dividend yield is good (5.88%). The Dividend Payout Ratio is currently reasonable. Buying this stock for passive income seems a good reasons to buy. The company does have a lot of debt, but most utilities do. The stock price still seems to be in a reasonable range, but in the top end of this range.
I do not own this stock of Capital Power Corp (TSX-CPX, OTC-CPRHF). Capital power Corp is in John Heinzl's yield Hog model portfolio. In Money Sense annual list of the 100 best dividend stocks for 2021, this stock was rated an A.
When I was updating my spreadsheet, I noticed that for the second quarter in June 2024 that do not state anywhere the number of outstanding shares. The problem is that the outstanding shares increased a lot in the first two quarters of 2024.
If you had invested in this company in December 2013, for $1,001.10 you would have bought 47 shares at $21.30 per share. In December 2023, after 10 years you would have received $848.12 in dividends. The stock would be worth $1,788.48. Your total return would have been $2,626.60. This would be a total return of 12.32% per year with 5.91% from capital gain and 6.41% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $21.30 | $1,001.10 | 47 | 10 | $848.12 | $1,778.48 | $2,626.60 |
The current dividend yield is good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 5.88%. The 5, 10 and historical dividend yields are also good at 5.75%, 6.27% and 5.75%. The dividend growth is low (below 8% per year) at 6.4% per year. The last dividend increase was in 2024 and it was for 6%.
The Dividend Payout Ratios (DPR) are currently fine but has been too high over the past 5 years. The DPR for 2023 for Earnings per Share (EPS) is good at 39% with 5 year coverage is too high at 120%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 39% with 5 year coverage is too high at 101%. The DPR for 2023 for Adjusted Funds from Operations (AFFO) is good at 34% with 5 year coverage at 35%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 21% with 5 year coverage at 26%. The DPR for 2023 for Free Cash Flow (FCF) is too high at 04% with 5 year coverage at 110%. But there is no agreement on what the FCF is each year.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 38.99% | 119.52% |
| AEPS | 38.96% | 100.87% |
| AFFO | 33.69% | 35.41% |
| CFPS | 20.76% | 25.98% |
| FCF | 103.57% | 110.02% |
Debt Ratios could be improved and ratios show that this company carries a bit debt load. The Long Term Debt/Market Cap Ratio for 2023 is too high at 102 and currently fine at 0.85. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2023 which is good at 0.69 and currently at 0.63 because this is an important one for a Utilities. The Liquidity Ratio for 2023 is fine at 1.29 and too low currently at 0.88 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.49 and currently still too low at 1.22. The Debt Ratio for 2023 is fine at 1.40 and 1.48 currently. The Leverage and Debt/Equity Ratios for 2023 are far too high at 4.58 and 3.27 and currently at 3.83 and 2.59.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.02 | 0.85 |
| Lg Term /A | 0.69 | 0.63 |
| Intang/GW | 0.17 | 0.15 |
| Liquidity | 1.29 | 0.88 |
| Liq. + CF | 1.49 | 1.22 |
| Debt Ratio | 1.40 | 1.48 |
| Leverage | 4.58 | 3.83 |
| D/E Ratio | 3.27 | 2.59 |
The Total Return per year is shown below for years of 5 to 14 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 6.36% | 14.13% | 7.31% | 6.82% |
| 2013 | 10 | 6.45% | 12.32% | 5.91% | 6.41% |
| 2009 | 14 | 4.57% | 9.89% | 4.17% | 5.73% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 36.69, 42.71 and 50.35. The corresponding 10 year ratios are 24.28, 34.32 and 43.55. The corresponding historical ratios are 22.06, 27.68 and 30.57. The current P/S Ratio is 11.52 based on a stock price of $44.34 and EPS estimate for 2024 of $3.85. The current ratio is below the low ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 16.72, 19.85 and 22.57. The corresponding 10 year ratios are 16.92, 21.40 and 24.08. The current P/AEPS Ratio is 11.00 based on a stock price of $44.34 and AEPS estimate for 2024 of $4.03. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 5.04, 5.96 and 7.10. The corresponding 10 year ratios are 5.10, 6.05 and 7.23. The current P/AFFO Ratio is 6.97 based on a stock price of $44.34 and AFFO estimate for 2024 of $6.36. The current ratio is between and the median and high ratios of the 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 $46.70. The 10-year low, median, and high median Price/Graham Price Ratios are 1.00, 1.19 and 1.34. The current P/GP Ratio is 0.95 based on a stock price of $44.34. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 1.35. The current P/B Ratio is 1.84 based on a Book Value of $3,125M, Book Value per Share of $24.05 and a stock price of $44.34. The current ratio is 36% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2024 of $26.65. The analyst calculates the Book Value differently and the 10 year median ratio would be 0.86. The P/B Ratio would be 1.66 based on a Book Value of $3,462M and a stock price of $44.34. The current ratio is 92% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.25. The current P/CF Ratio is 5.95 based on a stock price of $44.34, Cash Flow per Share estimate for 2024 of $7.45 and Cash Flow of $968M. The current ratio is 13% above 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 5.75%. The current dividend yield is 5.88% based on dividends of $2.6076 and a stock price of $44.34. The current yield is 2.3% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 6.27%. The current dividend yield is 5.88% based on dividends of $2.6076 and a stock price of $44.34. The current yield is 6.2% below the 10 year median dividend yield. 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 1.66. The current P/S Ratio is 1.82 based Revenue estimate for 2024 of $3,164M, Revenue per Share of $24.35 and a stock price of $44.34. The current ratio is 9.5% 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 could still be reasonable. The dividend yield tests show the stock price to be reasonable and above and below the median. The 10 year dividend yield test shows the stock price to be above the median. The P/S Ratio test confirms this result. The other tests run from Cheap (example P/E test) to expensive (example P/B test).
When I look at analysts’ recommendations, I find Strong Buy (4), Hold (5) and Underperform (1). The consensus would be a Buy. The 12 month consensus stock price is $45.30 with a low of $40.00 and a High of $54.00. The consensus stock price of $45.30 implies a total return of 8.05% with 2.17% from capital gains and 5.88% from dividends based on a current stock price of $44.34.
Analyst mostly like this stock on Stock Chase. In 2024 some think it is a Buy and some a Hold. Amy Legate-Wolfe on Motley Fool thinks now is the time to buy this 6% dividend stock. She also likes it because it is into renewables. Puja Tayal on Motley Fool says this is a cash gushing dividend stock. The company put out a Press Release about their fourth quarter of 2023 results.. The company put out a Press Release about their second quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock and talks about how the issuing of new shares affect this company and its shareholders. Simply Wall Street has 4 warnings out on this stock of debt is not well covered by operating cash flow; earnings are forecast to decline by an average of 10.9% per year for the next 3 years; dividend of 5.81% is not well covered by free cash flows; and significant insider selling over the past 3 months. Simply Wall Street gives this stock 4 stars out of 5.
Capital Power Corp is a North American power producer whose principal activities are developing, acquiring, and operating power plants. Through its subsidiary, Capital Power owns and operates a portfolio of natural gas, coal, wind, solar, and solid fuel energy generating facilities. These are located throughout Western and Central Canada and the U.S. Capital Power's natural gas and coal facilities. Its web site is here Capital Power Corp.
The last stock I wrote about was about was ATCO Ltd (TSX-ACO.X, OTC-ACLLF) ... learn more. The next stock I will write about will be Boralex Inc (TSX-BLX, OTC-BRLXF) ... learn more on Friday, August 30, 2024 around 5 pm. Tomorrow on my other blog I will write about Crypto Currencies .... learn more on Thursday, August 29, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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 site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Also, on my book blog I have put a review of the book Everything Under the Heavens by Howard French learn more...
No comments:
Post a Comment