Big new projects will pay off for decades

Article Excerpt

TransCanada and Canadian Utilities are both working on major new projects. Despite the huge size of these undertakings, their overall risk is low. That’s because government regulators will let the companies pass along most of the costs to their customers in the form of higher rates. This should let both firms keep paying their current dividends, or raise them. ATCO owns a majority interest in Canadian Utilities, so it also stands to profit from these projects. As well, Finning should benefit by selling construction equipment and repair services to TransCanada and Canadian Utilities. TRANSCANADA CORP. $33 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 624 million; Market cap: $20.6 billion; Price-to-sales ratio: 2.3; SI Rating: Above Average) operates a 59,000-kilometre pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. It also owns or invests in 20 electrical power plants. To diversify its operations, TransCanada is building the $12-billion U.S. Keystone pipeline, which will pump crude oil from…