Why Altagas Ltd. Is up Over 2%

Altagas Ltd.’s (TSX:ALA) stock is up over 2% following its Q3 earnings release. What should you do now? Let’s find out.

| More on:
gas

Altagas Ltd. (TSX:ALA), one of North America’s largest owners and operators of energy infrastructure, released its third-quarter earnings results and announced a dividend increase this morning, and its stock has responded by rising more than 2% in early trading. The stock still sits more than 18% below its 52-week high of $35.55 reach back in October 2016, so let’s break down the quarterly results and the dividend increase to determine if we should be long-term buyers today.

The results that ignited the rally 

Here’s a quick breakdown of six of the most notable financial statistics from Altagas’s three-month period ended on September 30, 2017, compared with the same period in 2016:

Metric Q3 2017 Q3 2016 Change
Revenue $502 million $492 million 2.0%
Normalized EBITDA $190 million $176 million 8.0%
Normalized net income $48 million $38 million 26.3%
Normalized net income per share $0.28 $0.23 21.7%
Normalized funds from operations (FFO) $143 million $137 million 4.4%
Normalized FFO per share $0.83 $0.84 (1.2%)

Dividend hike? Yes, please! 

As a result of its strong operational performance, Altagas announced a 4.3% increase to its monthly dividend to $0.1825 per share, and this increase is effective for its December 15th payment.

Reiterating its outlook on 2017

In the press release, Altagas also reiterated its outlook on 2017, which calls for low double-digit percentage growth in normalized EBITDA and high single-digit percentage growth in normalized FFO.

What should you do with Altagas today?

It was a great quarter overall for Altagas, and it posted very strong results for the first nine months of fiscal 2017, including revenue growth of 18.5% to $1.81 billion, normalized net income growth of 22.1% to $0.83 per share, and normalized FFO growth of 3.6% to $2.57 per share.

With all of this being said, I think the market has responded correctly by sending its stock higher, and I think it still represents a very attractive long-term investment opportunity, because it’s one of the industry’s best growth stocks and because it sports a beautiful 7.5% yield after today’s increase. Foolish investors should take a closer look and strongly consider making Altagas a long-term core holding.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in the companies mentioned. Altagas is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »