Dividend Safe Despite Environmental Risks

Article Excerpt

TRANSALTA CORP. $25 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 202.4 million; Market cap: $5.1 billion; SI Rating: Average) operates 50 electrical power plants in North America and Australia. TransAlta’s revenue grew from $1.7 billion in 2002 to $2.8 billion in 2006, or 13.3% compounded annually. Most of that growth came from acquisitions. Earnings fell from $1.01 a share (total $171.2 million) in 2002 to $0.70 a share ($134.9 million) in 2004, due to rising fuel costs. In 2005, profits improved to $0.82 a share ($161.3 million). In November 2006, the company decided to close the coal mine next to its power plant in Centralia, Washington. It will continue to run the plant with coal from Wyoming under a long-term contract. Due to closure costs and writedowns, TransAlta’s earnings in 2006 fell to $0.22 a share ($44.9 million). If you exclude all unusual items, it would have earned $1.16 a share ($233.8 million). Heavy reliance on coal Coal is TransAlta’s main fuel,…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.