Sound Bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price is cheap to reasonable. I would have liked better liquidity metrics, but these metrics have often been a problem for this company. I’ve checked the past 20 years. The payout rates are improving and that’s nice to see. Insiders are still selling, but with some recent purchases under $ 65. See my table on TC Energy Corp..
I own this TC Energy Corp stock (TSX-TRP, NYSE-TRP). I bought the stock in 2000 at a convenient time. The company had cut its dividend payments to reorganize the company and get it in shape for long-term profitability. For this reason, the shares of this company fell sharply. People whose income depends on dividends can be unforgiving and upset in the company when a trustworthy company lowers its dividends.
When I updated my spreadsheet, I found that I was doing well with this stock and had a total annual return of 11.28% with 6.49% from capital gains and 4.79% from dividends. In the past 5 years, however, the total return has been only 7.88% per year, with 3.91% coming from capital gains and 3.98% from dividends. I also noticed that some insiders sold last year. However, since the stock is fueling the market, there have been some purchases between $ 50.00 and $ 65.00 per share.
The dividend yields are moderate, the dividend growth is low to moderate. The current dividend yield is in the good range (5% and 6%), which would not be surprising as we are currently in a bear market. The current dividend yield is 6.08%. The dividend yields of 5, 10 and historically are 4.23%, 4.10% and 4.30%.
The dividend increase for the past 5 years has been 9.12% per year. That is higher than in the past. See the table below. However, the last dividend increase for 2020 was 8% lower.
The distribution rates are okay, but could stand for improvement and are improving. The DVR for EPS for 2019 was 69% with a 5-year coverage of 123%. 5-year coverage is high due to a loss of profit in 2015 and a low profit in 2016. The DVR for CFPS for 2019 was 49% with 5-year coverage of 46%. I prefer a CFPS coverage of 40% or less. The DPR for free cash flow cannot be calculated due to a negative FCF. Both the Wall Street Journal and Morningstar agree that the FCF was negative, but do not match the exact numbers. Analysts expect the FCF to be positive in 2020 after being negative in the past 3 years.
The debt ratios are in need of improvement. The ratio of long-term debt to market capitalization for 2019 is 0.53. Even with the recent drop, it’s still good at 0.69. The debt ratio is 1.48. The leverage and debt / equity ratios are okay at 3.06 and 2.06, respectively.
The liquidity ratios are not as good as I would like them to be. The one for 2019 is 0.59. Even if the cash flow is added after dividends and the current share of long-term debt and short-term debt, it is only 1.38. If the liquidity ratio is less than 1.00, it means that short-term assets cannot cover short-term debts. This utility has a lot of debt. Liquidity metrics have changed significantly over time, but have often been low. It is best if this ratio is 1.50 or better. The final value has been below 1.50 six times in the past 20 years.
The total return per year is shown below for years 5 through 29 through the end of 2019. The capital gain column shows the portion of the total return that is attributable to capital gains. The dividend column shows the part of the total return that is attributable to dividends. See table below.
|Of||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The 5-year low, median and high median price-earnings-per-share ratios are 12.34, 13.95 and 16.48. The corresponding 10-year ratios are 17.80, 19.10 and 20.74. The corresponding historical ratios are 12.31, 13.99 and 16.03. The current P / E ratio is $ 13.00 based on a stock price of $ 53.32 and an EPS estimate for 2020 of $ 4.10.
This stock price check suggests that the stock price is relatively cheap.
I get a Graham price of $ 51.29. The 10-year low, median and high median price / Graham price ratios are 1.23, 1.38 and 1.46. The current P / GP ratio is 1.04 based on a stock price of $ 53.32. This stock price check suggests that the stock price is relatively cheap.
I get a 10-year average price / book value per share of 2.05. The current P / E ratio is 1.87 based on a stock price of $ 53.32, a book value of $ 26,762 million and a book value per share of $ 28.52. The current P / B ratio is 9% below the 10-year ratio. This stock price check suggests that the stock price is relatively reasonable and below the median.
I am getting a historic mean dividend yield of 4.30%. The current dividend yield is 6.08% based on dividends of $ 3.24 and a stock price of $ 53.32. The current yield is 41% above the historic dividend yield. This stock price check suggests that the stock price is relatively cheap.
I get a 10-year average dividend yield of 4.10%. The current dividend yield is 6.08% based on dividends of $ 3.24 and a stock price of $ 53.32. The current yield is 48% above the 10-year dividend yield. This stock price check suggests that the stock price is relatively cheap.
The 10-year average price / sales ratio is 3.71. The current P / E ratio is 3.53, based on a stock price of $ 53.32, a 2020 sales estimate of $ 14.191 million, a share revenue of $ 15.12 and a stock price of $ 53.32. The current rate is 5% below the 10-year rate. This stock price check suggests that the stock price is relatively reasonable and below the median.
Results of stock price tests are that the stock price is cheap to reasonable. You can’t ignore the P / S ratio test and it just shows the price as reasonable. The P / B ratio test shows the same thing. Other good tests, like the dividend yield tests, show that the stock price is cheap. The value in the dividend yield test is that you base it on current values, not on past values or estimates.
Is it a good company for a reasonable price? I own this stock and think it is a good utility to own it. The price is cheap to reasonable.
When I look at the analysts’ recommendations, I find Strong Buy (7), Buy (8) and Hold (8). The consensus would be a purchase. The 12-month stock price is $ 72.57. This means a total return of 42.18% with 36.10% from capital gains and 6.08% from dividends.
See what analysts are saying Stock chase. They like this stock and say positive things. Andrew Walker continues Colorful fool says the company has a solid dividend payout history. A writer on Simply Wall Street deals with the ROCE of this company. A writer on Simply Wall Street talks about analysts’ forecasts after the latest financial data. Anna Zalik continues The conversation talks about the name change of this company.
TC Energy is an energy infrastructure company consisting of pipeline and power generation facilities in Canada, the United States and Mexico. The website is here TC Energy Corp..
The last stock I wrote about was TransAlta Corp (TSX-TA, NSYE-TAC)) … Learn more. The next stock I will write about will be AltaGas Ltd (TSX-ALA, OTC-ATGFF) … Learn more on Monday, March 23, 2020 around 5 p.m.
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