Monthly Dividend Stock Analysis Series – Part 4
Welcome to the 4th edition of our monthly dividend stock analysis series. Today we are looking at renewable energy stalwart TransAlta Renewables. This monthly dividend superstar trades on the Toronto Stock Exchange (RNW), and on the over the counter market (TRSWF).
Monthly Dividend Stock Number 4: TransAlta Renewables
TransAlta Renewables has a long history in generating renewable energy reaching back as far as 100 years. The company was carved out of the larger TransAlta in 2013, with the Mother company retaining a major shareholding. TransAlta Renewables owns and operates renewbale energy generating facilities.
The company is seen as a reliable dividend stock for investors, having consistently maintained or increased its shareholder distributions by around 4 per cent (4%) every year since 2014. It currently owns approximately 44 power-generating facilities, including hydro power, natural gas, solar and wind. About 43 per cent (43%) of the company’s revenue comes from natural gas in Australia and Canada, and just over half (51%) from wind turbines.
This diverse base of underlying projects makes TRSWF a strong contender offering stable overall income for inclusion in a monthly income portfolio.
Strong Growth Prospects for the Short and Long Term
The prospects for this stock look particularly favorable. Renewable energy generation continues to be a strong growth sector as the global economy slowly continues to reduce reliance on fossil fuels to power industry, homes and businesses.
Current and short-term future growth also look good for TransAlta. Earnings before interest tax depreciation and amortization (EBITDA) grew by $8 million to $438 million in 2019. This was due in no small part to large new facilities owned by the company recording full-year results for the first time. With more new assets also coming online right now, further short-term revenue projections look very good indeed.
Doing Well Despite Coronavirus Worries
TransAlta has also weathered the current coronavirus crisis pretty well. Revenue from operations in Q1 were on a par with 2019 at $94 million, and US-based operations in wind and solar did particularly well. Adjusted funds from operations (FFO) per-share fell by just 3 per cent (3%) year-on year, as did cash available for distributions. Not too bad considering the wider economic circumstances.
The monthly dividend currently paid out by TransAlta is currently $0.0783 per share in Canadian dollars. This equates to an annualized dividend of $0.67 per share, or an annual yield of 6.5 per cent (6.5%). That’s pretty good compared to the wider stock market.
Overall, TransAlta might make a good addition to a portfolio of stocks paying out monthly dividends, offering some much- appreciated diversification outside of the usual REITs and BDCs.
For more useful articles like this, visit Garnaco’s blog. You can access all the Monthly Dividends Stock Analysis Series articles at the links below:
- Monthly Dividend Stock Series 1 : Realty Income
- Monthly Dividend Stock Series 2: STAG Industrial
- Monthly Dividend Stock Series 3: Main Street Capital
- Monthly Dividend Stock Series 5: Shaw Communications
- All 53 Stocks That Pay Monthly Dividends
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