A Canadian energy giant has just sealed a monumental deal, marking a significant milestone in its journey to become a dominant force in the North American natural gas market. The acquisition of three gas utilities from Dominion Energy, valued at a staggering $14 billion, has catapulted the company to the top spot in the industry.
This strategic move has not only expanded the company’s customer base by over 600,000 but also added a substantial 13,000 miles of gas distribution and transmission pipelines to its portfolio. The resulting cash flow, backed by government-regulated rate structures and steady gas demand, is expected to grow steadily in the coming years.
The company’s CEO hailed the deal as a “once-in-a-generation opportunity” to enhance its gas utility business, which now accounts for 22% of its annual adjusted earnings. This significant expansion has also increased the company’s exposure to lower-carbon energy sources, further diversifying its business and bolstering its growth profile.
With a strong financial foundation and a proven track record of delivering on its annual financial guidance for 18 consecutive years, the company is poised to continue growing its dividend. Its diversified platform, comprising liquids pipelines, gas transmission and midstream, gas distribution and storage, and renewable power, generates a significant 98% of its earnings from cost-of-service or contracted assets.
The company’s robust balance sheet and substantial backlog of commercially secured capital projects, valued at $17.8 billion, provide ample opportunities for future growth. With a target to pay out 60% to 70% of its cash flow in dividends, investors can expect a steady stream of income. The company’s dividend growth rate is expected to be around 5% per annum, further extending its impressive streak of 29 consecutive years of dividend increases.
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