Unpacking the Dividend Performance and Sustainability of Canadian Utilities Ltd (CDUAF, Financial)
Canadian Utilities Ltd (CDUAF) recently announced a dividend of $0.45 per share, payable on 2023-12-01, with the ex-dividend date set for 2023-11-01. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Canadian Utilities Ltd's dividend performance and assess its sustainability.
What Does Canadian Utilities Ltd Do?
Canadian Utilities Ltd, a subsidiary of holding company Atco, offers gas and electricity services. The company's main divisions include electricity (generation, transmission, and distribution), pipelines & liquid (natural gas and water), and Retail Energy. Headquartered in Calgary, Alberta, the firm primarily operates in Canada and Australia, with a presence in the United States and Mexico. Canadian Utilities launched a large venture called Atco Energy, which provides low-cost and sustainable energy solutions for Alberta.
A Glimpse at Canadian Utilities Ltd's Dividend History
Canadian Utilities Ltd has maintained a consistent dividend payment record since 1973. Dividends are currently distributed on a quarterly basis. Canadian Utilities Ltd has increased its dividend each year since 1973, earning it the title of a dividend king, a distinction given to companies that have consistently increased their dividend each year for at least the past 50 years.
Breaking Down Canadian Utilities Ltd's Dividend Yield and Growth
As of today, Canadian Utilities Ltd has a 12-month trailing dividend yield of 6.18% and a 12-month forward dividend yield of 6.18%. This suggests an expectation of consistent dividend payments over the next 12 months.
Canadian Utilities Ltd's dividend yield of 6.18% is near a 10-year high and outperforms 73.83% of global competitors in the Utilities - Regulated industry, suggesting that the company's dividend yield stands out as an attractive proposition for income investors.
Over the past three years, Canadian Utilities Ltd's annual dividend growth rate was 1.70%. Extended to a five-year horizon, this rate increased to 4.20% per year. Over the past decade, Canadian Utilities Ltd's annual dividends per share growth rate stands at 7.80%.
Based on Canadian Utilities Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Canadian Utilities Ltd stock as of today is approximately 7.59%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one must evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Canadian Utilities Ltd's dividend payout ratio is 0.85, which may suggest that the company's dividend may not be sustainable.
Canadian Utilities Ltd's profitability rank, as of 2023-09-30, is 7 out of 10, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
For the sustainability of dividends, a company must have robust growth metrics. Canadian Utilities Ltd's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Canadian Utilities Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Canadian Utilities Ltd's revenue has increased by approximately 1.60% per year on average, a rate that underperforms approximately 78.19% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Canadian Utilities Ltd's earnings increased by approximately -14.00% per year on average, a rate that underperforms approximately 81.28% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -4.00% underperforms approximately 77.13% of global competitors.
Conclusion
In conclusion, Canadian Utilities Ltd's consistent dividend payments, combined with its growth rate, make it an appealing investment for income-focused investors. However, its high payout ratio and the underperformance in growth metrics relative to global competitors raise questions about the sustainability of future dividends. Therefore, investors should closely monitor these factors when considering Canadian Utilities Ltd for their portfolio.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
