atco
Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves you should know about, from coverage in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor. We continue to advise against investing in bonds, because low interest rates hurt their appeal, while rising rates would push down their future value. For stable income and growth, we prefer high-yielding utilities. Their dividends also qualify for the dividend tax credit. ATCO LTD. (Toronto symbols ACO.X [class I non-voting] and ACO.Y [class II voting; www.atco.com) holds 53.2% of Canadian Utilities. It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction and energy exploration firms; Canadian Utilities owns the remaining 24.5%....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $39 and CU.X [class B voting] $39; Income Portfolio, Utilities sector; Shares outstanding: 262.8 million; Market cap: $10.2 billion; Price-to-sales ratio: 2.9; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www. canadianutilities.com) distributes electricity and natural gas in Alberta and Australia. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see page 84) owns 53.2% of the company.
Canadian Utilities continues to invest in projects that will make Alberta’s electricity grid more reliable. For example, it is building 355 kilometres of new transmission lines and substations in the province’s southeast. So far, the company has spent $1.3 billion on this $1.8-billion project. It should begin operating in early 2015.
In all, Canadian Utilities expects to spend $5.5 billion on upgrades to its power lines and pipelines in Alberta between 2014 and 2016. These improvements will help it take advantage of rising electricity demand from oil sands projects.
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Canadian Utilities continues to invest in projects that will make Alberta’s electricity grid more reliable. For example, it is building 355 kilometres of new transmission lines and substations in the province’s southeast. So far, the company has spent $1.3 billion on this $1.8-billion project. It should begin operating in early 2015.
In all, Canadian Utilities expects to spend $5.5 billion on upgrades to its power lines and pipelines in Alberta between 2014 and 2016. These improvements will help it take advantage of rising electricity demand from oil sands projects.
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ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $48 and ACO.Y [class II voting] $48; Income Portfolio, Utilities sector; Shares outstanding: 115.3 million; Market cap: $5.5 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.atco.com) holds 53.2% of Canadian Utilities (see page 85). It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction and energyexploration firms; Canadian Utilities owns the remaining 24.5%.
The company recently agreed to sell its information technology subsidiaries in Canada and Australia. These businesses provide computer support, billing, payment processing and related services to ATCO’s other subsidiaries, as well as outside clients.
The buyer, Wipro Ltd., will pay $210 million when the sale closes later this year. In addition, Wipro will provide computer support and related services to ATCO under a new 10-year contract.
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The company recently agreed to sell its information technology subsidiaries in Canada and Australia. These businesses provide computer support, billing, payment processing and related services to ATCO’s other subsidiaries, as well as outside clients.
The buyer, Wipro Ltd., will pay $210 million when the sale closes later this year. In addition, Wipro will provide computer support and related services to ATCO under a new 10-year contract.
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Inflation remains low in Canada. That’s one reason why interest rates remain at today’s historically low levels. However, the long-term outlook is for higher rates, as the expansion of the money supply in the past few years will likely spur inflation. We continue to advise against investing in bonds, because low interest rates hurt their appeal, while rising rates would push down their future value. If you need stable income, we prefer highyielding utilities like these four. Their dividends also qualify for the dividend tax credit....
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $55 and ACO.Y [class II voting] $55; Income Portfolio, Utilities sector; Shares outstanding: 115.1 million; Market cap: $6.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.atco.com) has won a contract to operate a new camp for 1,500 potash miners in Saskatchewan....
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $54 and ACO.Y [class II voting] $54; Income Portfolio, Utilities sector; Shares outstanding: 115.1 million; Market cap: $6.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.atco.com) holds 53.1% of Canadian Utilities (see left). It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction and energy-exploration firms; Canadian Utilities owns the remaining 24.5%.
In 2013, ATCO’s revenue rose 8.6% to $4.4 billion from $4.0 billion in 2012. That’s mainly because Canadian Utilities’ new power lines boosted its contribution. The structures division’s revenue rose just 0.4%, partly because ATCO sold its 50% stake in a South American joint venture for $124 million. It also completed three large projects in Australia in 2012 and early 2013.
Earnings rose 13.0%, to $418 million, or $3.62 a share, from $370 million, or $3.20. Without unusual items, earnings rose 5.4%.
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In 2013, ATCO’s revenue rose 8.6% to $4.4 billion from $4.0 billion in 2012. That’s mainly because Canadian Utilities’ new power lines boosted its contribution. The structures division’s revenue rose just 0.4%, partly because ATCO sold its 50% stake in a South American joint venture for $124 million. It also completed three large projects in Australia in 2012 and early 2013.
Earnings rose 13.0%, to $418 million, or $3.62 a share, from $370 million, or $3.20. Without unusual items, earnings rose 5.4%.
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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $41 and CU.X [class B voting] $41; Income Portfolio, Utilities sector; Shares outstanding: 261.0 million; Market cap: $10.7 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www. canadianutilities.com) distributes electricity and natural gas in Alberta and Australia. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see right) owns 53.1% of the company.
Canadian Utilities continues to invest in projects that will make Alberta’s electricity grid more reliable. For example, it recently spent $650 million to build 355 kilometres of new transmission lines and substations in the province’s southeast.
Thanks to these new assets, Canadian Utilities earned $587 million in 2013, up 6.1% from $553 million in 2012. Earnings per share rose 3.5%, to $2.09 from $2.02, on more shares outstanding. Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 11.1%. Revenue gained 11.3%, to $3.4 billion from $3.0 billion.
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Canadian Utilities continues to invest in projects that will make Alberta’s electricity grid more reliable. For example, it recently spent $650 million to build 355 kilometres of new transmission lines and substations in the province’s southeast.
Thanks to these new assets, Canadian Utilities earned $587 million in 2013, up 6.1% from $553 million in 2012. Earnings per share rose 3.5%, to $2.09 from $2.02, on more shares outstanding. Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 11.1%. Revenue gained 11.3%, to $3.4 billion from $3.0 billion.
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Interest rates will probably stay low for the next year or two. That should encourage income-seeking investors to keep buying high-yielding utilities.
These four power providers continue to invest in new projects, which will give them more cash flow for dividends....
These four power providers continue to invest in new projects, which will give them more cash flow for dividends....
IGM FINANCIAL INC. $55 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 252.3 million; Market cap: $13.9 billion; Price-to-sales ratio: 5.3; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www. igmfinancial.com) is Canada’s largest independent mutual fund company....