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.
