TRANSCANADA CORP. $55.25 - Toronto symbol TRP

TRANSCANADA CORP. $55.25 (Toronto symbol TRP; Shares outstanding: 708.6 million; Market cap: $39.1 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.transcanada.com) operates 68,500 kilometres of natural gas pipelines and over 11,800 megawatts of power generation in Canada and the U.S.

In the three months ended December 31, 2014, TransCanada’s revenue rose 12.1%, to $2.6 billion from $2.3 billion a year earlier. Excluding one-time items, earnings per share rose 24.1%, to $0.72 from $0.58.

The company completed $7.0 billion worth of growth projects in 2014. It plans to complete $46 billion of additional projects secured by long-term contracts by 2020 (an amount greater than its current $39.1-billion market cap).

TransCanada is raising its quarterly dividend by 8.3% with the March 2015 payment, to $0.52 from $0.48. This is the 15th consecutive year it has raised its dividend. The shares now yield 3.8%.

The stock trades at 22.1 times the $2.50 a share that TransCanada should earn this year. That’s a high multiple for a utility stock, but it’s still reasonable in light of the company’s strong growth prospects.

TransCanada is a buy.

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