Capital Power prepares for Another Dividend Increase
Back in 2016 Capital Power initiated a 7% dividend increase;it also proposed a plan to increase the dividend by 7% every year until 2021.Often the increase has been announced in the second quarter.If Capital Power sticks to it's dividend plan then the announcement should come in the next quarterly report that the dividend will go from $1.79 per share to $1.91.
Changes to Capital Power
As early as 2013 Capital Power was mostly a coal-fired power generator with most plants in Alberta.But Capital Power has made a lot of changes.Some of the coal-fired power plants have been mothballed and some become co-generation using natural gas.But the biggest change is acquiring power generators outside of Alberta,chiefly in the American mid-west.Many of these are renewable power generators.In that vein,CPX recently constructed the New Frontier wind plant(100MW) in North Dakota that began commercial operations in December,2018.It also acquired a 580 MW natural gas generation facility in Arlington Valley,California in Septmeber,2018.The Arlington facility is expected to add US$62 million of adjusted EBITDA in 2019.
Dividend Increases
All of these changes have helped to increase both revenues and earnings.There has been a steady increase of the dividend by 7% each year since 2015 and through to 2021.This has been done by growth both by internal reorganization and by acquisitions.In the past the P/E ratio has been around 10 or 11 indicative of a slow growing utlitity.Now it is around the 12 to 13 mark.Consequently their payout ratio has remained in the safe range throughout the dividend increases.It should only be slightly above .8 after the next dividend increase in 2019 and this is considered safe for a Canadian utility with fairly good growth.
New Highs
Capital Power has been steadily rising in price since the end of 2018.Now it is trading about $31.50 per share but it has hit a high of $32.44 in March.This blog sees CPX marching towards the $33-$34 price range after the announcement of a 7% dividend increase in 2019, 2020 and2021.Certainly the new Arlington facility will add to 2019 EBITDA and look for one other new facility or perhaps an increase in the ownership of C2CNT that transforms carbon dioxide. https://direct.credit-suisse.com/dn/c/cls/auth https://www.brookfield.com/
Changes to Capital Power
As early as 2013 Capital Power was mostly a coal-fired power generator with most plants in Alberta.But Capital Power has made a lot of changes.Some of the coal-fired power plants have been mothballed and some become co-generation using natural gas.But the biggest change is acquiring power generators outside of Alberta,chiefly in the American mid-west.Many of these are renewable power generators.In that vein,CPX recently constructed the New Frontier wind plant(100MW) in North Dakota that began commercial operations in December,2018.It also acquired a 580 MW natural gas generation facility in Arlington Valley,California in Septmeber,2018.The Arlington facility is expected to add US$62 million of adjusted EBITDA in 2019.
Dividend Increases
All of these changes have helped to increase both revenues and earnings.There has been a steady increase of the dividend by 7% each year since 2015 and through to 2021.This has been done by growth both by internal reorganization and by acquisitions.In the past the P/E ratio has been around 10 or 11 indicative of a slow growing utlitity.Now it is around the 12 to 13 mark.Consequently their payout ratio has remained in the safe range throughout the dividend increases.It should only be slightly above .8 after the next dividend increase in 2019 and this is considered safe for a Canadian utility with fairly good growth.
New Highs
Capital Power has been steadily rising in price since the end of 2018.Now it is trading about $31.50 per share but it has hit a high of $32.44 in March.This blog sees CPX marching towards the $33-$34 price range after the announcement of a 7% dividend increase in 2019, 2020 and2021.Certainly the new Arlington facility will add to 2019 EBITDA and look for one other new facility or perhaps an increase in the ownership of C2CNT that transforms carbon dioxide. https://direct.credit-suisse.com/dn/c/cls/auth https://www.brookfield.com/
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