Topics Dividend Stocks

TransCanada $60.38 - Toronto symbol TRP

TRANSCANADA CORP. $60.38 (Toronto symbol TRP; Shares outstanding: 702.5 million; Market cap: $48.6 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.transcanada.com) operates 90,300 kilometres of natural gas pipelines and generates over 3,100 megawatts of power in Canada and the U.S.

In the quarter ended March 31, 2016, the company earned $366 million, or $0.52 a share, down 7.8% from $450 million, or $0.60, a year earlier. That was mainly due to costs from planned maintenance at its 48.5%-owned Bruce Power nuclear station in Ontario. Revenue rose 4.6%, to $2.9 billion from $2.6 billion.

On July 1, 2016, TransCanada completed the acquistion of Texas-based Columbia Pipeline Group (New York symbol GPCX) for $13 billion U.S. Columbia operates natural gas pipelines and underground gas storage terminals across the U.S.

TransCanada has $25-billion in other projects underway that it expects to complete over the next three years. These investments will let it increase its dividend by between 8% and 10% each year through 2020.

The company already raised its dividend by 8.2% in April 2016, marking the 16th straight year of hikes. The stock yields 3.7%.

TransCanada shares have shot up 35% this year and trade close to all-time highs. Currently, the stock trades at 23.2 times the $2.60 a share the company should earn in 2016. That’s a high multiple for a utility stock, but it’s reasonable in light of the company’s strong growth prospects.

TransCanada is a buy.

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