The pipeline company saw its cash flow jump in the latest quarter—an improvement that should protect its high dividend yield of 7.5%. VERESEN (Toronto symbol VSN; www.vereseninc.com) owns pipelines, power plants and natural gas-processing facilities across North America.
These include: 50% of the Alliance gas line, which runs the 3,000 kilometres between Chicago and Fort St. John, B.C.; and 50% of the Ruby pipeline, which runs 1,100 kilometres from Wyoming to Oregon. The company also owns the Alberta Ethane Gathering System and 42.7% of the Aux Sable liquids plant.
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In the three months ended June 30, 2016, Veresen’s cash flow was $94.0 million, up 46.9% from $64.0 million a year earlier. Cash flow per share rose 36.4%, to $0.30 from $0.22, on more shares outstanding.
Energy Stocks: Power generation business valued at $1 billion
The company is moving ahead with the sale of its entire power generation business to focus on pipelines and gas processing. The sale could bring in as much as $1 billion. Veresen’s 12 power plants make up about 14% of its $4.5 billion in assets.
The company feels that its area of expertise is pipelines. As well, lots of new renewable energy projects are starting up, and it believes that will cut the returns it can make from its current power generation business.
The stock trades at 12.6 times Veresen’s forecast 2017 cash flow of $1.06 a share. It yields a high 7.5%, but the company’s cash flow is steady, and it plans to maintain its current dividend rate.
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Thanks for highlighting a oil-related stock that has fared well. I hold this stock and others in the sector, so this is welcomed news.
I also like the stock…….& it pays a monthly dividend of over 7%
Thanks for the update…….as a share holder of this stock it’s nice to have positive updates…..your work is appreciated
Any thoughts on what is causing the rapid drop of Veresen’s price from 13.50 to 12.25 (~9%) in the recent few days?