VERESEN $13.86 (Toronto symbol VSN; Shares outstanding: 200.9 million; Market cap: $2.8 billion; TSINetwork Rating: Average; Yield: 7.2%) owns pipelines, power plants and gas-processing facilities across North America. A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Enbridge owns the other 50%. Veresen also owns the Alberta Ethane Gathering System, and Veresen and Enbridge together hold 85.4% of the Aux Sable NGL plant.
In February 2012, Veresen paid Encana Corp. $920 million for the Hythe/Steeprock natural gas gathering and processing complex. Encana signed a long-term deal to buy most of this facility’s gas.
To diversify beyond pipelines and gas-processing, Veresen continues to expand into power generation. This includes hydroelectric facilities, wind farms, natural gas-fired plants and waste-heat facilities.
In the quarter ended September 30, 2013, Veresen’s cash flow per share rose 12.9%, to $0.35 from $0.31.
The company’s longer-term outlook is sound. The stock trades at 12.6 times Veresen’s forecast 2014 cash flow of $1.10 a share. It yields a high 7.2%, and the dividend appears safe.
Veresen is still a buy.
