canadian utilities
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $36 and CU.X [class B voting] $36; Income Portfolio, Utilities sector; Shares outstanding: 258.2 million; Market cap: $9.3 billion; Price-to-sales ratio: 3.2; 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 right) owns 52.9% of the company.
In the quarter ended March 31, 2013, Canadian Utilities earned $183 million, down 3.7% from $190 million a year earlier. Earnings per share fell 4.2%, to $0.68 from $0.71. (All per-share amounts adjusted for a 2-for-1 stock split in May 2013.)
Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 3.4%. Revenue gained 8.0%, to $876 million from $811 million. Colder-than-normal winter weather increased demand for electricity and natural gas. Higher rates in Australia also contributed to the gain.
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In the quarter ended March 31, 2013, Canadian Utilities earned $183 million, down 3.7% from $190 million a year earlier. Earnings per share fell 4.2%, to $0.68 from $0.71. (All per-share amounts adjusted for a 2-for-1 stock split in May 2013.)
Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 3.4%. Revenue gained 8.0%, to $876 million from $811 million. Colder-than-normal winter weather increased demand for electricity and natural gas. Higher rates in Australia also contributed to the gain.
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As is the case with TransCanada (see page 71), fears of higher interest rates have hurt these four power utilities. However, their high quality, mostly regulated operations will keep giving them plenty of steady cash flows for dividends.
CANADIAN UTILITIES LTD....
CANADIAN UTILITIES LTD....
MANITOBA TELECOM SERVICES INC., $33.93, Toronto symbol MBT, rose 6% today after it agreed to sell its Allstream subsidiary to Accelero Capital Holdings, a private firm controlled by Egyptian billionaire Naguib Sawiris. In 2004, the company paid $1.6 billion for Allstream, which provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada. The sale price is $520 million, which is equal to 23% of Manitoba Telecom’s $2.3-billion market cap. If you disregard various closing costs, Manitoba Telecom will receive $405 million. Assuming regulators approve, the company expects to complete the sale in the second half of 2013....
Low interest rates continue to spur demand for dividend-paying stocks, such as these two electrical utilities. In the latest issue of The Successful Investor we examine the outlook for each of these Canadian dividend stocks. Both of these companies plan to split their shares on a 2-for-1 basis in May 2013. CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] and CU.X [class B voting]; www.canadianutilities.com) distributes electricity and natural gas in Alberta. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see below) owns 52.9% of the company....
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $92 and ACO.Y [class II voting] $92; Income Portfolio, Utilities sector; Shares outstanding: 57.5 million; Market cap: $5.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.6%; 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 2012, ATCO’s revenue rose 11.9% to $4.4 billion from $4.0 billion a year earlier. In addition to a higher contribution from Canadian Utilities, revenue at its structures division rose 24.8% due to new mines, such as the Jansen potash project in Saskatchewan. Earnings rose 14.7%, to $375 million, or $6.48 a share, from $327 million, or $5.64.
ATCO continues to trade for less than the value of its assets; investors call this a “holding company discount.” Based on current prices, you can buy a share of ATCO for $92 and get roughly $93 worth of Canadian Utilities. That means you get ATCO’s non-utility businesses, which provide a third of its earnings, for free.
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In 2012, ATCO’s revenue rose 11.9% to $4.4 billion from $4.0 billion a year earlier. In addition to a higher contribution from Canadian Utilities, revenue at its structures division rose 24.8% due to new mines, such as the Jansen potash project in Saskatchewan. Earnings rose 14.7%, to $375 million, or $6.48 a share, from $327 million, or $5.64.
ATCO continues to trade for less than the value of its assets; investors call this a “holding company discount.” Based on current prices, you can buy a share of ATCO for $92 and get roughly $93 worth of Canadian Utilities. That means you get ATCO’s non-utility businesses, which provide a third of its earnings, for free.
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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $79 and CU.X [class B voting] $79; Income Portfolio, Utilities sector; Shares outstanding: 128.6 million; Market cap: $10.1 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.5%; TSINetwork Rating: Above A v e r a g e ; www.canadianutilities.com) distributes electricity and natural gas in Alberta. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see right) owns 52.9% of the company.
In July 2011, Canadian Utilities bought an Australian natural gas distributor for $1.1 billion. This move, along with an expansion of its power transmission grid in Alberta, continues to benefit the company. These new assets have also helped offset lower revenue from its Alberta power plants due to planned maintenance shutdowns.
As a result, the company’s earnings rose 13.1% in 2012, to a record $561 million, or $4.11 a share. The new Australian business contributed $26 million to that total. In 2011, Canadian Utilities earned $496 million, or $3.65 a share. Revenue rose 4.7%, to $3.1 billion from $3.0 billion.
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In July 2011, Canadian Utilities bought an Australian natural gas distributor for $1.1 billion. This move, along with an expansion of its power transmission grid in Alberta, continues to benefit the company. These new assets have also helped offset lower revenue from its Alberta power plants due to planned maintenance shutdowns.
As a result, the company’s earnings rose 13.1% in 2012, to a record $561 million, or $4.11 a share. The new Australian business contributed $26 million to that total. In 2011, Canadian Utilities earned $496 million, or $3.65 a share. Revenue rose 4.7%, to $3.1 billion from $3.0 billion.
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Low interest rates continue to spur demand for high-quality dividend-paying stocks, such as these four electrical utilities. We like the outlook for all of them, but only three are buys right now.
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $79 and CU.X [class B voting] $79; Income Portfolio, Utilities sector; Shares outstanding: 128.6 million; Market cap: $10.1 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.5%; TSINetwork Rating: Above A v e r a g e ; www.canadianutilities.com) distributes electricity and natural gas in Alberta....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $79 and CU.X [class B voting] $79; Income Portfolio, Utilities sector; Shares outstanding: 128.6 million; Market cap: $10.1 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.5%; TSINetwork Rating: Above A v e r a g e ; www.canadianutilities.com) distributes electricity and natural gas in Alberta....
CANADIAN UTILITIES LTD. $74 (www.canadianutilities.com) has raised its dividend every year since 1972. The new annual rate of $1.94 a share, up 9.6% from $1.77, yields 2.6%. Buy.
ATCO LTD. $83 (www.atco.com) has raised its quarterly dividend by 14.5%, to $0.375 a share from 0.3275. The new annual rate of $1.50 yields 1.8%. The company has raised its dividend each year for the past 20 years. Moreover, at current rices, you can buy a share of ATCO for $83 and get roughly $86 worth of 52.8%-owned subsidiary Canadian Utilities (see below)....
ATCO LTD. $83 (www.atco.com) has raised its quarterly dividend by 14.5%, to $0.375 a share from 0.3275. The new annual rate of $1.50 yields 1.8%. The company has raised its dividend each year for the past 20 years. Moreover, at current rices, you can buy a share of ATCO for $83 and get roughly $86 worth of 52.8%-owned subsidiary Canadian Utilities (see below). This means you get ATCO’s other businesses, such as building temporary structures for mining firms, for free. Best Buy. CANADIAN UTILITIES LTD. $74 (www.canadianutilities.com) has raised its dividend every year since 1972. The new annual rate of $1.94 a share, up 9.6% from $1.77, yields 2.6%. Buy. BCE INC. $45 (www.bce.ca) purchased The Source chain of 700 mall-based electronic stores in 2009. This ear, it plans to open 20 new outlets. These stores give BCE a low-risk way to promote its mobile phones and TV services. Best Buy.