First dividend hike after spinoff

Article Excerpt

TC ENERGY CORP. $67 is a buy. The company (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 1.04 billion; Market cap: $69.7 billion; Price-to-sales ratio: 2.5; Dividend yield: 5.1%; TSINetwork Rating: Above Average; www.tcenergy.com) spun off its oil pipeline business as a separate company called South Bow Corp. (Toronto symbol SOBO). Investors received 0.2 of a South Bow share for each TC share they held. The former parent now focuses on its 93,300-kilometre pipeline network, which pumps natural gas from Alberta to eastern Canada and the U.S. It also owns gas pipelines in Mexico, and it owns or invests in seven power plants in Canada and the U.S. TC plans to spend $24.9 billion on new projects and upgrades through 2031. Those new projects should lift its EBITDA (earnings before interest, taxes, depreciation and amortization) from $10.0 billion in 2024 to between $11.7 billion and $11.9 billion in 2027. Moreover, potential U.S. tariffs will have little impact on TC. That’s because 97%…