Is it a good company at a reasonable price? I still like this utility stock. It has a lot of debt, but most utilities do. I plan to continue to hold what shares I have. I enough of this stock, so I will not buy anymore. The test results are showing the stock price as reasonable but above the median. I would be cautious about buying any non cheap stock in these uncertain times and this stock is at the top of its price range.
I own this stock of TC Energy Corp (TSX-TRP, NYSE-TRP). When I bought this stock, it was on Mike Higgs’ Canadian Dividend Growth Stock list and the other dividend lists that I followed. I bought the stock in 2000 at an opportune time. The company had been cutting their dividend payments in order to re-organize and get the company into shape for long term profitability. This company’s stock fell hard because of this. People who depend on dividends for their income can be an unforgiving lot and can get really upset at company when a trusted company cuts its dividends.
When I was updating my spreadsheet, I noticed that I have had this stock for 25 year and I have made a total return of 10.00% per year with 4.24% from capital gains and 5.76% from dividends.
I also noticed for TD and WSJ the prior stock values were decreased by 91.09% for the spinoff South Bow Corporation even though neither site marks this event. The valuations were confusing. I noticed that dividends were decreased by some 85.68%. When the company is showing prior years value that the values are decreased in the 80% range. I have decreased values based on the decrease in dividends. I have decreased stock price by 91.09% as TD and WSJ have done.
If you had invested in this company in December 2014, for $1,040.25 you would have bought 20 shares at $52.01 per share. In December 2024, after 10 years you would have received $514.85 in dividends. The stock would be worth $1,339.80. Your total return would have been $1,854.65. This would be a total return of 6.86% per year with 2.56% from capital gain and 4.30% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $52.01 | $1,040.25 | 20 | 10 | $514.85 | $1,339.80 | $1,854.65 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.94%. The 5 year median dividend yield is good (5% to 6% ranges) at 5.35%. The 10 year and historical median dividend yields are moderate (2% to 4% ranges) at 4.75% and 4.10%. The dividend growth is low (below 8% per year) at 5.3% per year over the past 5 years. The last dividend increase was in 2025 and it was for 3.34%.
The Dividend Payout Ratios (DPR) need improving and analyst think this will happen. The DPR for 2024 for Earnings per Share (EPS) is too high at 81% with 5 year coverage much too high at 127%. The DPR for 2024 for Funds from Operations (FFO) is good at 43% with 5 year coverage at 49%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is too high at 88% with 5 year coverage at 86%. The DPR for 2024 for Cash Flow per Share (CFPS) is fine at 45% with 5 year coverage at 44%. The DPR for 2024 for Free Cash Flow 1 (FCF 1) is too high at 347% with 5 year coverage at 1765%. The DPR for 2024 for Free Cash Flow 2 (FCF 2) is fine at 78% with 5 year coverage is too high at 219%. There is no agreement on what FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 80.60% | 126.86% |
| FFO | 42.95% | 49.75% |
| AEPS | 87.52% | 86.26% |
| CFPS | 45.24% | 44.33% |
| FCF 1 | 346.75% | 1764.77% |
| FCF 2 | 77.91% | 218.93% |
Debt Ratios need improving and the company has too much debt. The Long Term Debt/Market Cap Ratio for 2024 is fine at 0.65 and currently at 0.64. The Liquidity Ratio for 2024 is far too low at 0.55 and 0.55 currently. If you added in Cash Flow after dividends, the ratios only get to 0.95 and currently at 0.96. If you add back in the current portion of the debt, the ratios are fine at 7.76 and 7.77. The Debt Ratio for 2024 is fine at 1.48 and 1.48 currently. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.08 and 2.08 and currently at 3.08 and 2.08. I prefer these to be below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.65 | 0.64 |
| Intang/GW | 0.20 | 0.19 |
| Liquidity | 0.55 | 0.55 |
| Liq. + CF | 0.95 | 0.96 |
| Liq. + CF + D | 7.76 | 7.77 |
| Debt Ratio | 1.48 | 1.48 |
| Leverage | 3.08 | 3.08 |
| D/E Ratio | 2.08 | 2.08 |
The Total Return per year is shown below for years of 5 to 36 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 5.32% | 5.91% | 1.24% | 4.67% |
| 2014 | 10 | 7.21% | 6.86% | 2.56% | 4.30% |
| 2009 | 15 | 6.41% | 9.39% | 4.84% | 4.55% |
| 2004 | 20 | 6.13% | 8.91% | 4.62% | 4.29% |
| 1999 | 25 | 5.02% | 13.18% | 7.26% | 5.92% |
| 1994 | 30 | 4.78% | 9.60% | 4.98% | 4.62% |
| 1989 | 35 | 5.05% | 9.30% | 4.77% | 4.52% |
| 1988 | 36 | 4.90% | 9.29% | 4.77% | 4.52% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 17.49, 19.99 and 22.49. The corresponding 10 year ratios are 15.31, 17.05 and 18.77. The corresponding historical ratios are 13.10, 14.93 and 17.28. The current P/E Ratio is 18.71 based on a stock price of $68.87 and EPS estimate for 2025 of $3.68. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 12.26, 15.30 and 18.32. The corresponding 10 year ratios are 13.14, 15.53 and 18.56. The corresponding historical ratios are 14.78, 16.90 and 19.23. The current P/AEPS ratio is 17.93 based on a stock price of $68.87 and AEPS estimate for 2025 of $3.84. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/Funds from Operations Ratios are 7.25, 8.28 and 9.32. The corresponding 10 year ratios are 7.36, 8.68 and 7.36. The corresponding historical ratios are 7.91, 9.10 and 10.42. The current P/AFFO ratio is 9.05 based on a stock price of $68.87 and AEPS estimate for 2025 of $3.84. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive
I get a Graham Price of $45.68. The 10-year low, median, and high median Price/Graham Price Ratios are 0.97, 1.16 and 1.38. The current P/GP Ratio is 1.51 based on a stock price of $68.87. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.92. The current P/B Ratio is 2.85 based on a Book Value of $25,093M, Book Value per Share of $24.15 and a stock price of $68.87. The current ratio is 48% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2025, but the analyst calculates the Book Value different from me and this method has a 10 year median P/B Ratio of 1.70. The Book Value per Share estimate for 2025 is $24.97 with a Book Value of $25,946M and with stock price of $68.87 the ratio will be 2.76. This ratio is 62% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 7.73. The current P/CF Ratio is 9.15 based on Cash Flow per Share estimate for 2025 of $7.05, Cash Flow of $7,824M and a stock price of $68.87. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 4.10%. The current dividend yield is 4.90% based on a stock price of 68.87 and dividends of $3.40. The current ratio is 20% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.75%. The current dividend yield is 4.90% based on a stock price of $68.87 and dividends of $3.40. The current ratio is 4% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 4.32. The current P/S Ratio is 4.77 based on Revenue estimate for 2025 of $14,987M, Revenue per Share of $14.42 and a stock price of $68.87. The current ratio is 11% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably still reasonable, but be cautious as price is near the top of the current range. The 10 year dividend yield test says the stock price is reasonable and below the median. The P/S Ratio test does not confirm this, but says it is reasonable but above the median. A lot of the tests are saying that the stock price is relatively expensive. The other ones are saying reasonable, but above the median.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (7), Hold (9), and Underperform (2). The consensus would be a Buy. The 12 month stock price consensus is $70.60 with a high of $79.00 and low of $39.00. The consensus stock price of $70.60 implies a total return of 7.45% with 2.51% from capital gains and 4.94% from dividends based on a current stock price of $68.87.
Analysts on Stock Chase still like this company and think it is a buy. Stock chase gives this stock 5 stars out of 5. However, I have noticed that Money Sense has taken this company off their dividend list for 2025. Puja Tayal on Motley Fool says that in 10 years’ time, you will be glad you bought this stock. Adam Othman on Motley Fool thinks this is a top stock for dividend investors. The company put out a Press Release about their fourth quarter of 2024.
Zacks via Yahoo Finance talks about TC energy expecting a rise in Natural Gas Demand in the next 10 years. Simply Wall Street via Yahoo Finance reviews this stock. They have two warnings out on this stock of interest payments are not well covered by earnings; and dividend of 4.99% is not well covered by earnings or free cash flows.
TC Energy operates natural gas and power generation assets in Canada and the United States. Its web site is here TC Energy Corp.
The last stock I wrote about was 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 Friday, March 21, 2025 around 5 pm. Tomorrow on my other blog I will write about US Debt Risk by Ray Dalio…. learn more on Thursday, March 20, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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