Is it a good company at a reasonable price? This stock is a low risk utility stock. Every portfolio probably should have some utility stocks. This is a good one, but there are probably cheaper utility stocks available at the present time. This stock is still testing as reasonable, but it seems to be at the top of that ranges according to P/S Ratio test, but close to the median by the 10 year median dividend yield test.
I own this stock of Pembina Pipelines Corp (TSX-PPL, NYSE-PBA). In December 2001 I thought it would be a good time to purchase this stock as the market was relatively low. Pipeline stocks are conservative and the return on this one was good at 9.7%. When I purchased this stock, it was an Income Trust company.
When I was updating my spreadsheet, I noticed to the end of March 2025, I have this stock for 23 years and I have made a total return per year of 15.94% with 7.86% from capital gains and 8.08% from dividends. I first bought this stock in 2021 and have made several purchases since. Dividends are now lower than when I bought this stock as I bought this stock as an income trust and income trust companies have high dividend yields.
If you had invested in this company in December 2014, for $1,1016.16 you would have bought 24 shares at $42.34 per share. In December 2024, after 10 years you would have received $558.12 in dividends. The stock would be worth $1,274.64. Your total return would have been $1,832.76. This would be a total return of 7.17% per year with 2.29% from capital gain and 4.88% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $42.34 | $1,016.16 | 24 | 10 | $558.12 | $1,274.64 | $1,832.76 |
The current dividend yield is good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 5.34%. The 5, 10 and historical dividend yields are also good at 6.05%, 5.31% and 6.98%. The dividend growth is low (below 8% per year) at 3.1% per year over the past 5 years. The last dividend increase was in 2024 and it was for 3.4%.
The Dividend Payout Ratios (DPR) are high and but have always been on the high side. The DPR for 2024 for Earnings per Share (EPS) is high at 91% with 5 year coverage at 106%. The DPR for 2024 for Adjusted Funds from Operations (AFFO) is good at 48% with 5 year coverage high at 43%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 38% with 5 year coverage at 51%. The DPR for 2024 for Free Cash Flow (FCF) is high at 68% with 5 year coverage at 74%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 91.25% | 105.98% |
| AFFO | 48.37% | 53.49% |
| CFPS | 38.18% | 40.56% |
| FCF | 68.22% | 73.95% |
Debt Ratios are fine, but Liquidity ratio should be improved. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.36 and currently at 0.38. The Liquidity Ratio for 2024 is too low at 0.54 and 0.54 currently. If you added in Cash Flow after dividends, the ratios are still low at 1.10 and currently at 1.05. I prefer these ratios be at 1.50 or higher. The Debt Ratio for 2024 is good at 1.95 and 1.95 currently. The Leverage and Debt/Equity Ratios for 2024 are fine at 2.05 and 1.05 and currently at 2.05 and 1.05.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.36 | 0.38 |
| Intang/GW | 0.21 | 0.22 |
| Liquidity | 0.54 | 0.54 |
| Liq. + CF | 1.10 | 1.05 |
| Debt Ratio | 1.95 | 1.95 |
| Leverage | 2.05 | 2.05 |
| D/E Ratio | 1.05 | 1.05 |
The Total Return per year is shown below for years of 5 to 27 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 3.10% | 7.17% | 1.99% | 5.18% |
| 2014 | 10 | 4.79% | 7.17% | 2.29% | 4.88% |
| 2009 | 15 | 3.68% | 14.96% | 7.67% | 7.29% |
| 2004 | 20 | 4.85% | 14.47% | 7.03% | 7.44% |
| 1999 | 25 | 4.32% | 18.87% | 8.38% | 10.49% |
| 1997 | 27 | 6.05% | 20.10% | 8.45% | 11.65% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.12, 14.69, 16.25. The corresponding 10 year ratios are 15.32, 18.01 and 20.47. The corresponding historical ratios are 18.28, 20.56 and 33.78. The current P/E Ratio is 16.78 based on a stock price of $51.68 and EPS estimate for 2025 of $3.08. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Fund from Operations (AFFO) data. The 5-year low, median, and high median Price/Adjusted Fund from Operations Ratios are 7.96, 9.13 and 10.66. The corresponding 10 year ratios are 8.58, 9.79 and 11.35. The corresponding historical ratios are 10.71, 12.62 and 14.11. The current ratio is 9.96 based on a stock price of $51.68 and AFFO estimate for 2025 of $5.19. This ratio is between 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 median.
I also have Fund from Operations (FFO) data. The 5-year low, median, and high median Price/Fund from Operations Ratios are 7.26, 8.64 and 10.14. The corresponding 10 year ratios are 8.20, 9.22 and 10.61. The corresponding historical ratios are 9.78, 12.06 and 13.00. The current ratio is 9.07 based on a stock price of $51.68 and FFO from the last 12 months of $5.70. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $42.81. The 10-year low, median, and high median Price/Graham Price Ratios are 1.06, 1.21 and 1.38. The current ratio is 1.21 based on a stock price of $51.68. This ratio is at the median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.68. The current ratio is 1.95 based on a stock price of $51.68, Book Value of $15,346 and Book Value per Share of $29.21. The current ratio is 16% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Book Value per Share estimate for 2025 of $26.76. This analyst calculates Book Value differently than me and this way produces a 10 year P/B Ratio of 1.54. The estimate of $26.76 implies a ratio of 1.93 with a stock price of $51.68. This ratio is 25% above the P/B Ratio of 1.54. 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 9.60. The current ratio is 9.77 based on Cash Flow per Share for 2025 of $5.29, Cash Flow of $3,069M, and a stock price $51.68. The current ratio is 1.8% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 6.98%. The current dividend yield is 5.34 based on dividends of $2.76 and stock price of $51.68. The current dividend yield is 23% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, this company used to be an income trust and income trust companies have quite high dividend yields.
I get a 10 year median dividend yield of 5.31%. The current dividend yield is 5.34 based on dividends of $2.76 and stock price of $51.68. The current dividend yield is 0.7% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 3.03. The current ratio is 3.61 based on a stock price of $51.68, Revenue estimate for 2025 of $8,298M, and Revenue per Share of $14.30. The current ratio is 19% 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 could still in a reasonable range, but at the top end. The 10 year dividend yield test shows that the stock is reasonable, but just below the median. The P/S Ratio testing is showing that the stock price is reasonable, but very close to expensive. Most of the testing is showing the stock price as reasonable and above and below the median.
When I look at analysts’ recommendations, I find Strong Buy (8), Buy (5), and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $61.39 with a high of $66.00 and low of $55.00. The consensus stock price of $61.39 implies a total return of 24.13% with 18.79% from capital gains and 5.34% from dividends based on a current stock price of $51.68.
Analysts’ recommendations on Stock Chase for 2025 are either Buy or Top Pick. Robin Brown on Motley Fool says this is a blue chip stock with an attractive income stream. Jitendra Parashar on Motley Fool says this company is a dependable Canadian Stock for your TFSA. The company put out a Press Release about their fourth quarter results for 2024.
Insider Monkey via Yahoo Finance looks at this stock and says there is a bull case theory for it. Simply Wall Street via Yahoo Finance thinks this stock is undervalued. Simply Wall Street has 3 warnings on this stock of large one-off items impacting financial results; dividend of 5.47% is not well covered by earnings; and has a high level of debt.
Pembina Pipeline is a midstream company serving the Canadian and North American (primarily Bakken) markets with an integrated product portfolio. Its assets include pipelines and gas gathering as well as assets across fractionation, storage, and propane exports. Its web site is here Pembina Pipelines Corp.
The last stock I wrote about was about was Barrick Mining Corp (TSX-ABX, NYSE-GOLD) ... learn more. The next stock I will write about will be South Bow Corp (TSX-SOBO, NYSE-SOBO) ... learn more on Wednesday, April 23, 2025 around 5 pm. Tomorrow on my other blog I will write about Europe Poorer than Mississippi.... learn more on Tuesday, April 22, 2025 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.
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