Is it a good company at a reasonable price? This stock is mostly a utility. As such, you can expect a good dividend, but little in the way of dividend growth and lower capital gains growth. I think that any dividend stock portfolio should have at least a couple of utility type stocks. They are usually good stocks to have both in good times and bad times. This stock has mostly done well for shareholders, but it would appear to be currently rather on the expensive side to buy.
I do not own this stock of ATCO Ltd (TSX-ACO.X, OTC-ACLLF). I started to look at this stock in 2009 because it was a dividend paying stock that was on everyone’s list. At that time this stock was on the Dividend Achievers list, the Dividend Aristocrats list and also was on Mike Higgs’ list. ATCO (TSX-ACO-X) owns 52.3% (2021) Canadian Utilities (TSX-CU), so you would not buy both these stocks.
When I was updating my spreadsheet, I noticed this stock has a good dividend, but it is growing slowly. There is always a trade off between dividend yield and growth. If dividends continue to increase by 3.00% as they have in the past 5 years, what you would get in dividends in 5, 10 and 15 years is shown in the Dividends Paid (Div Pd) column. The next column shows what your yield on the current stock price of $76.45 would be. The last column shows the percentage of your stock’s price would be covered by dividends in 5, 10 and 15 years.
| Div Pd | Div Yield | Years | At IRR | Div Cov |
|---|---|---|---|---|
| $2.41 | 3.15% | 5 | 3.00% | 14.43% |
| $2.79 | 3.65% | 10 | 3.00% | 28.01% |
| $3.24 | 4.24% | 15 | 3.00% | 43.76% |
If you had invested in this company in December 2015, for $1,035.30 you would have bought 29 shares at $35.70 per share. In December 2025, after 10 years you would have received $488.24 in dividends. The stock would be worth $1,635.02. Your total return would have been $2,123.26. This would be a total return of 8.45% per year with 4.68% from capital gain and 3.78% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $35.70 | $1,035.30 | 29 | 10 | $488.24 | $1,635.02 | $2,123.26 |
The current dividend yield is moderate with dividend growth low. The current dividend is moderate (2% to 4% ranges) at 2.74%. The 5, 10 and historical dividend yields are moderate at 4.37%, 4.03% and 2.22%. The dividend growth is low (below 8% per year) at 3% per year over the past 5 years. The last dividend increase was in 2026 and it was for 3%.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2025 for Earnings per Share (EPS) is far too high at 152% with 5 year coverage too high at 66%. The DPR for 2025 for Adjusted Earnings per Share (AEPS) is good at 44% with 5 year coverage at 49%. The DPR for 2025 for Cash Flow per Share (CFPS) is good at 10% with 5 year coverage at 10%. The DPR for 2025 for Free Cash Flow (FCF) is far too high at 454% with 5 year coverage at 225%. FCF for 2025 varies from $50M (which I am using) to $227M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 151.73% | 66.25% |
| AEPS | 43.89% | 48.63% |
| CFPS | 9.94% | 10.41% |
| FCF | 454.00% | 224.58% |
Some Debt Ratios are good, but the company has too much debt, but utilities often have high debt. The Long Term Debt/Market Cap Ratio for 2025 is rather high at 2.00 and currently at 1.48. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2025 which is fine at 0.56 and currently at 0.56 because this is a more important ratio for a Utility. The Liquidity Ratio for 2025 is good at 1.80 and 2.04 currently. The Debt Ratio for 2025 is fine at 1.43 and 1.45 currently. The Leverage Ratio is high at 3.31 and Debt/Equity Ratios for 2025 is fine at 1.43 and currently Leverage Ratio is high 3.22 and Debt/Equity Ratios fine at 1.45.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term A | 0.56 | 0.56 |
| Lg Term R | 2.00 | 1.48 |
| Intang/GW | 0.19 | 0.15 |
| Liquidity | 1.80 | 2.04 |
| Liq. + CF | 3.36 | 4.09 |
| Debt Ratio | 1.43 | 1.45 |
| Leverage | 3.31 | 3.22 |
| D/E Ratio | 1.43 | 1.45 |
The Total Return per Year is shown below for years of 5 to 37 to the end of 2025. 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. |
|---|---|---|---|---|---|
| 2020 | 5 | 3.00% | 13.51% | 9.09% | 4.41% |
| 2015 | 10 | 7.38% | 8.45% | 4.68% | 3.78% |
| 2010 | 15 | 9.32% | 7.59% | 4.40% | 3.19% |
| 2005 | 20 | 8.71% | 8.37% | 5.34% | 3.03% |
| 2000 | 25 | 9.08% | 9.66% | 6.53% | 3.13% |
| 1995 | 30 | 10.92% | 12.47% | 8.64% | 3.82% |
| 1990 | 35 | 10.57% | 12.20% | 8.74% | 3.46% |
| 1988 | 37 | 10.51% | 13.44% | 9.58% | 3.86% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.40, 13.67 and 14.94. The corresponding 10 year ratios are 12.35, 14.07 and 16.21. The corresponding historical ratios are 9.17, 10.67 and 12.34. The current ratio is 16.95 based on a stock price of $75.94 and EPS estimate for 2026 of $4.48. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.95, 11.13 and 12.31. The corresponding 10 year ratios are 10.85, 12.62 and 14.13. The corresponding historical ratios are 10.85, 12.62 and 14.13. The current ratio is 15.56 based on a stock price of $75.94 and AEPS estimate for 2026 of $4.88. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $68.12. The 10-year low, median, and high median Price/Graham Price Ratios are 0.71, 0.82 and 0.91. The current ratio is 1.11 based on a stock price of $75.94. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.20. The current ratio is 1.80 based on a Book Value of $4,755M, Book Value per Share of $42.26 and a stock price of $75.94. The current ratio is 50% 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 2.54. The current ratio is 3.43 based on Cash Flow estimate for 2026 of $2,489M, Cash Flow per Share of $22.12 and a stock price of $75.94. The current ratio is 35% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 2.22%. The current dividend yield is 2.74% based on dividends of $2.0784 and a stock price of $75.94. The current ratio is 23% 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 4.06%. The current dividend yield is 2.74% based on dividends of $2.0784 and a stock price of $75.94. The current ratio is 33% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 1.09. The current ratio is 1.46 based on Revenue estimate for 2026 of $5,860M, Revenue per Share of $52.08 and a stock price of $75.94. The current ratio is 34% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. All but one of my tests is showing that the stock price is relatively expensive. The 10 year median dividend yield says that the stock price is relatively expensive and it is confirmed by the P/S Ratio test.
When I look at analysts’ recommendations, I find Strong Buy (3) and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $81.00 with a high of $85.00 and a low of $76.00. The 12 month consensus stock price of $81.00 implies a total return of $9.40% with 6.66% from capital gains and 2.74% from dividend based on a current stock price of $75.94.
There are three entries on Stock Chase for 2026. There is one Hold and two Buys. Jitendra Parashar on Motley Fool says the company is pairing steady earnings growth with new projects. Amy Legate-Wolfe on Motley Fool says with regulated utility exposure could benefit from AI data Centres. The company put out a press release about their fourth quarter results for 2025. The company put out a Press Release about their second quarter of 2026.
The Canadian Press via Yahoo Finance talks about the company beginning constructions on a natural gas pipeline. This is great news. Simply Wall Street via Yahoo Finance talks about this stock and says that its fair value is $68.86. Simply Wall Street has 3 warnings out on this stock of interest payments are not well covered by earnings; dividend of 2.76% is not well covered by earnings; and profit margins (3.4%) are lower than last year (8.7%).
Atco Ltd is a Canada-based diversified company. It has 3 sections of Structures and Logistics, Neltume Ports, and Retail Energy segment. It generates maximum revenue from the ATCO Energy Systems segment and earns maximum revenue from Canada. Its web site is here ATCO Ltd.
The last stock I wrote about was about was Exchange Income Corp (TSX-EIF, OTC-EIFZF) ... learn more. The next stock I will write about will be Capital Power Corp (TSX-CPX, OTC-CPRHF) ... learn more on Friday, August 28, 2026 around 5 pm. Tomorrow on my other blog I will write about State of the Nation Financial Overview.... learn more on Thursday, August 27, 2026 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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