canadian utilities
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....
iShares 1-5 Year Laddered Corporate Bond Index ETF, $19.82, symbol CBO on Toronto (Units outstanding: 93.1 million; Market cap: $1.8 billion; ca.ishares.com), invests in a portfolio of short-term bonds drawn from the DEX (formerly Scotia Capital) Bond Index. The ETF first sold units to the public at $20 each and began trading on Toronto on February 25, 2009. Its MER is 0.28%, and it currently yields 4.2%....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $37 and CU.X [class B voting] $37; Income Portfolio, Utilities sector; Shares outstanding: 260.1 million; Market cap: $9.6 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.9%; 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 14) owns 53.1% of the company.
In the three months ended September 30, 2013, Canadian Utilities earned $127 million, up 8.5% from $117 million a year earlier. Earnings per share rose 4.8%, to $0.44 from $0.42, on more shares outstanding.
Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 6.7%. Revenue gained 5.7%, to $755 million from $714 million, mainly due to higher power rates.
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In the three months ended September 30, 2013, Canadian Utilities earned $127 million, up 8.5% from $117 million a year earlier. Earnings per share rose 4.8%, to $0.44 from $0.42, on more shares outstanding.
Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 6.7%. Revenue gained 5.7%, to $755 million from $714 million, mainly due to higher power rates.
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ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $47 and ACO.Y [class II voting] $47; Income Portfolio, Utilities sector; Shares outstanding: 115.2 million; Market cap: $5.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.atco.com) holds 53.1% of Canadian Utilities (see page 15). 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 the three months ended September 30, 2013, ATCO’s revenue rose 3.5% to $1.02 billion from $981.0 million a year earlier. That’s mainly because higher power rates in Alberta increased Canadian Utilities’ contribution. The structures division’s revenue fell 2.5% after it completed three contracts to build temporary housing and offices at an Australian liquefied natural gas (LNG) project in late 2012 and early 2013.
Earnings jumped 63.0%, to $132 million, or $1.15 a share, from $81 million, or $0.71. Without unusual items, earnings rose 6.3%.
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In the three months ended September 30, 2013, ATCO’s revenue rose 3.5% to $1.02 billion from $981.0 million a year earlier. That’s mainly because higher power rates in Alberta increased Canadian Utilities’ contribution. The structures division’s revenue fell 2.5% after it completed three contracts to build temporary housing and offices at an Australian liquefied natural gas (LNG) project in late 2012 and early 2013.
Earnings jumped 63.0%, to $132 million, or $1.15 a share, from $81 million, or $0.71. Without unusual items, earnings rose 6.3%.
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Holding companies give you an easy way to buy a variety of businesses at a discount. As well, their structure makes it easy for them to unlock hidden value by selling undervalued subsidiaries.
For example, Maple Leaf Foods has risen sharply since it said it would sell Canada Bread....
For example, Maple Leaf Foods has risen sharply since it said it would sell Canada Bread....
iShares S&P/TSX Capped Utilities Fund, $18.29, symbol XUT on Toronto (Shares outstanding: 5.6 million; Market cap: $102.4 million; ca.ishares.com), holds the 11 stocks in the S&P/TSX Capped Utilities Index. The ETF’s MER is 0.60%, and it yields 4.3%. The fund’s holdings are Fortis Inc., 21.0%; Canadian Utilities, 14.9%; Emera, 14.9%; TransAlta Corp., 13.2%; ATCO, 11.6%; Superior Plus Corp., 5.3%; Capital Power Corp., 5.0%; Northland Power, 4.7%; Algonquin Power & Utilities Corp., 3.8%; and Just Energy Group, 3.7%. The weight of any one company is capped at 25% of the index’s market capitalization. As a result, every three months, if the market cap of any given stock has risen above 25% of the total market cap of all the stocks in the index, the fund will sell shares of that stock to bring its weight down to the 25% cap level. The fund then uses the sale proceeds to buy other stocks in the index on a proportional basis....
FORTIS INC. $32 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 248.9 million; Market cap: $8.0 billion; Price-to-sales ratio: 1.7; Dividend yield 3.9%; TSINetwork Rating: Above Average; www.fortis.ca) is the main electricity supplier in Newfoundland and Prince Edward Island. It also operates power plants in other parts of Canada, the U.S. and the Cayman Islands. In addition, wholly owned FortisBC Energy distributes natural gas in B.C.
Fortis recently completed its takeover of CH Energy Group, which supplies gas and power in New York State. Fortis paid $1.5 billion U.S., including the assumption of $500 million U.S. of CH’s debt.
The company made several concessions to win regulatory approval, including freezing electricity rates until June 2015. It also extended the contract of CH’s main union by one year, to April 30, 2017. These moves will hurt CH’s contribution to Fortis’s earnings, at least in the short term.
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Fortis recently completed its takeover of CH Energy Group, which supplies gas and power in New York State. Fortis paid $1.5 billion U.S., including the assumption of $500 million U.S. of CH’s debt.
The company made several concessions to win regulatory approval, including freezing electricity rates until June 2015. It also extended the contract of CH’s main union by one year, to April 30, 2017. These moves will hurt CH’s contribution to Fortis’s earnings, at least in the short term.
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ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $44 and ACO.Y [class II voting] $44; Income Portfolio, Utilities sector; Shares outstanding: 115.2 million; Market cap: $5.1 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.atco.com) is a holding company. Its main subsidiary is 52.9%-owned Canadian Utilities (see left). It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction companies and energy exploration firms; Canadian Utilities owns the remaining 24.5%.
In the three months ended March 31, 2013, ATCO’s revenue rose 5.6% to $1.1 billion from $1.0 billion a year earlier. That’s mainly due to the higher contribution from Canadian Utilities. Revenue at its Structures division fell 0.9% after it completed several major projects in 2012.
Earnings fell 1.7%, to $117 million, or $1.01 a share, from $119 million, or $1.03. (All per-share amounts adjusted for a 2-for-1 stock split in May 2013.)
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In the three months ended March 31, 2013, ATCO’s revenue rose 5.6% to $1.1 billion from $1.0 billion a year earlier. That’s mainly due to the higher contribution from Canadian Utilities. Revenue at its Structures division fell 0.9% after it completed several major projects in 2012.
Earnings fell 1.7%, to $117 million, or $1.01 a share, from $119 million, or $1.03. (All per-share amounts adjusted for a 2-for-1 stock split in May 2013.)
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