The market traded on a slightly negative note this week after staging a sharp rally in the previous couple of weeks. Yesterday, the S&P/TSX Composite Index fell by 0.5% — bringing week-to-date losses to about 1%. Nonetheless, the Canadian market benchmark is still trading with over 5% gains on a month-to-date basis. Gradually rising economic activities, improving employment situation, and better-than-expected corporate earnings are boosting investors’ confidence. These factors could keep the momentum of the ongoing market rally intact in the coming months.
Let’s talk about an amazing Canadian dividend stock that just-reported its earnings. I expect its stock could yield solid returns in 2021 and beyond. Its stock would also give you handsome passive income in terms of dividends.
TC Energy’s latest earnings highlights
TC Energy (TSX:TRP)(NYSE:TRP) reported its fourth-quarter and full-year 2020 results on Thursday. The company’s revenue stood at $13 billion — at par with analysts’ expectations. The company beat analysts’ earnings estimates by reporting adjusted earnings of $4.20 per share in 2020 — higher than $4.14 in the previous year. Analysts were expecting TC Energy’s earnings to be around $4.05 per share.
The company missed analysts’ EBITDA estimates by a narrow margin, as it fell slightly to $9.35 billion from $9.37 billion in 2019. Nonetheless, its adjusted net profit margin continued to expand in 2020. TC Energy’s overall strong performance, despite the COVID-19-related challenges, boosted investors’ confidence, as its stock rose by 1% on February 18.
Other key updates
This Calgary-based energy infrastructure firm generates most of its revenue from the natural gas pipeline segment. Last month, TC Energy faced a setback when the newly elected American president Joe Biden revoked a presidential permit that allowed TC Energy to build a cross-border pipeline project called Keystone XL. The former president Donald Trump approved this project by signing a presidential permit about a year ago. While the company expressed disappointment on the revocation of the presidential permit, TC Energy’s management immediately took steps to ensure its financial growth consistency.
The company advanced its other similar large secured-capital projects. As a result, TC Energy expects to deliver a 5 to 7% dividend-growth rate going forward. Its stock already has an attractive 5.7% dividend yield at its current market price.
Stable 2021 outlook
TC Energy expects its 2021 adjusted earnings to be in line with its 2020 earnings. It expects increased incentive earnings from the Canadian Mainline. But an increase in transportation rates on Columbia Gas could affect its bottom line this year. Despite the negative impact from the revocation of its Keystone XL project and continued COVID-19 headwinds, its overall 2021 earnings outlook looks encouraging.
TC Energy is a reliable energy firm with a well-proven financial track record. It has assets of more than $100 billion. As the company continues to complete its work on major projects across North America in the coming years, its financial condition and profitability are likely to improve further. That’s why I find this Dividend Aristocrat to be one of the most attractive investment options for 2021.
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