Is it a good company at a reasonable price? This stock last appeared on the Money Sense Dividend list in 2022. They are raising the dividends when they should not be. They probably just want to stay on the Dividend Achievers List. That is a bad reason to raise dividends when you should not be. If you look at the Total Return chart, this company certainly has not had good returns for the past 15 years. I think a good return if 8% per year including capital gains and dividends. Currently I will hold my shares, but I would not be tempted to buy any more. It makes you think that the comment on Stock Chase is right. The price would seem to be reasonable at the present time.
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 EPS went down because revenue was lower (1.4%), but costs went up (8.6%). I have had this stock for 8 years and I have made a total return of 4.69% per year with 0.14% from capital gains and 4.55% from dividends. I am making a nice dividend from this stock, but the price is around what I paid for it in 2017.
If you had invested in this company in December 2014, for $1,022.75 you would have bought 25 shares at $40.91 per share. In December 2024, after 10 years you would have received $401.46 in dividends. The stock would be worth $871.25. Your total return would have been $1,272.71. This would be a total return of 2.57% per year with 1.59% from capital loss and 4.16% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $40.91 | $1,022.75 | 25 | 10 | $401.46 | $871.25 | $1,272.71 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.93%. The 5 year median dividend yield is good (5% to 6% ranges) at 5.26%. The 10 year and historical median dividend yields are moderate at 4.75% and 3.90%. The dividend increases are low (below 8% per year) at 1.4% per year over the past 5 years. Dividend increases have been very low over the last few years at around 1%. The last dividend increase was in 2025 and it was for 1.02%.
The Dividend Payout Ratios (DPR) need improving. The DPR for 2024 for Earnings per Share (EPS) is far too high at 112% with 5 year coverage at 106%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is too high at 76% with 5 year coverage at 80%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 27% with 5 year coverage at 27%. The DPR for 2024 for Free Cash Flow (FCF) is non-calculable due to a negative FCF with 5 year coverage too high at 473%. There is lots of disagreements on what FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 122.46% | 105.77% |
| AEPS | 76.03% | 80.13% |
| CFPS | 26.62% | 27.39% |
| FCF | -508.89% | 473.00% |
Debt Ratios are need improving and the company’s debt is high. The Long Term Debt/Market Cap Ratio for 2024 is too high at 1.13 and currently at 1.07. The Liquidity Ratio for 2024 is low at 1.10 and 1.04 currently. If you added in Cash Flow after dividends, the ratios are fine at 2.31 and currently at 2.03. The Debt Ratio for 2024 is fine at 1.43 and 1.43 currently. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.34 and 2.34 and currently at 3.34 and 2.34. I prefer the Leverage and D/E Ratios to be below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term | 1.13 | 1.07 |
| Intan/GW | 0.07 | 0.11 |
| Liquidity | 1.10 | 1.04 |
| Liq. + CF | 2.31 | 2.03 |
| Debt Ratio | 1.43 | 1.43 |
| Leverage | 3.34 | 3.34 |
| D/E Ratio | 2.34 | 2.34 |
The Total Return per year is shown below for years of 5 to 36 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 | 2.67% | 2.43% | -2.31% | 4.74% |
| 2014 | 10 | 6.34% | 2.57% | -1.59% | 4.16% |
| 2009 | 15 | 6.84% | 7.90% | 3.15% | 4.75% |
| 2004 | 20 | 6.49% | 9.05% | 4.28% | 4.77% |
| 1999 | 25 | 6.08% | 10.28% | 5.23% | 5.05% |
| 1994 | 30 | 5.55% | 11.74% | 6.04% | 5.70% |
| 1989 | 35 | 4.96% | 10.73% | 5.43% | 5.30% |
| 1988 | 36 | 4.96% | 11.16% | 5.59% | 5.57% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 19.36, 22.40 and 24.98. The corresponding 10 year ratios are 17.83, 20.31 and 22.55. The corresponding historical ratios are 11.96, 13.51 and 15.79. The current ratio is 15.47 based on a stock price of $37.12 and EPS estimate for 2025 of $2.40. 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 Earnings per Share (AEPS) Ratios. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 13.05, 15.45 and 17.07. The corresponding 10 year ratios are 13.84, 15.72 and 17.96. The corresponding historical ratios are 13.83, 15.77 and 17.71. The current ratio is 15.53 based on a stock price of $37.12 and AEPS estimate for 2025 of $2.39. The current ratio is below the 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 $32.79. The 10-year low, median, and high median Price/Graham Price Ratios are 1.00, 1.14 and 1.28. The current ratio is 1.13 based on a stock price of $37.12. The current ratio is below the 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 10-year median Price/Book Value per Share Ratio of 1.85. The current ratio is 1.86 based on a stock price of $37.12, Book Value of $4,532 and Book Value per Share of $20.00. The current ratio is 0.2% 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 a Book Value per Share estimate for 2025 of $20.17. This analyst calculates the Book Value differently than I do and, in this case, the 10 year median ratio is 1.43. The Book Value per Share of $20.17 implies a ratio of 1.84 based on a stock price of $37.12 and Book Value of $5,479M. This ratio of 1.84 is 28% 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 5.79. The current ratio is 5.55 based on Cash Value per Share estimate for 2025 of $6.69, Cash Flow of $272M and a stock price of $37.12. The current ratio is 4% 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 3.90%. The current ratio is 4.93% based on a stock price of $37.12 and dividends of $1.8308. The current dividend yield is 26% 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 4.75%. The current ratio is 4.93% based on a stock price of $37.12 and dividends of $1.8308. The current dividend yield is 4% 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 2.53. The current ratio is 2.42 based on a stock price of $37.12, Revenue estimate for 2025 of $4,169M, and Revenue per Share of $15.35. The current ratio is 4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable. The 10 year dividend yield test is saying this. The P/S Ratio test confirms a reasonable price. Most of the rest are saying that the stock price is reasonable and above or below the median.
When I look at analysts’ recommendations, I find Strong Buy (1), and Hold (5). The consensus would be a Hold. The 12 months stock price consensus is $40.17 with a high of $41.00 and a low of $39.00. The consensus stock price of $40.17 implies a total return of 13.15% with 8.22% from capital gains and 4.93% from dividends based on a current stock price of $37.12.
There is only one analyst rating on Stock Chase for 2025. He gives a partial sell because he thinks we should look at utilities but larger ones with more sustainable dividend growth like ENB to TRP. Sneha Nahata on Motley Fool likes this stock for passive income with a high yield and history of dividend increases. Demetris Afxentiou on Motley Fool picks this stock because it is a defensive stock with a good dividend. He says that it has a 50 year history of dividend increases. The company put out a Press Release about their fourth quarter of 2024 results. The company put out a Press Release about their first quarter of 2025 results.
Simply Wall Street via Yahoo Finance and reviews this stock and its dividend. They believe they paid out too much in dividends as I do. Simply Wall Street has 3 warnings of interest payments are not well covered by earnings; dividend of 4.8% is not well covered by earnings or free cash flows; profit margins (10.6%) are lower than last year (15.4%).
Canadian Utilities Ltd, a subsidiary of holding company Atco, offers gas and electricity services. Headquartered in Calgary, Alberta, the firm mainly operates in Canada, Australia, and others. Canadian Utilities launched a large venture called Atco Energy, which provides low-cost and sustainable energy solutions for Alberta. 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 Monday, May 26, 2025 around 5 pm.
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