Tag Archives: history

Let TransCanada Pump Income Into Your Portfolio

Click to enlarge TransCanada Corp (NYSE: TRP ) is a huge North American pipeline company whose network includes over 3,460 kilometers of oil pipeline and over 67,000 kilometers of gas pipeline that transports approximately 20% of North America’s gas. They currently own over $64 billion worth of assets which includes pipelines as well as storage for gas and oil. TransCanada faced huge headwinds in 2015 as the stock dropped as low as -32% from its 2014 high. The stock currently yield a very bountiful 4.7% and has partially rallied from its nasty dip last year, the company has a great history of dividend growth and share buybacks and I think TransCanada represents a good opportunity to buy in on its weakness considering its very impressive ability to grow its revenue. Huge projects to continue TransCanada’s impressive revenue growth TransCanada currently has $13 billion worth of projects that are expected to be operational by 2018 and $45 billion worth of long term projects that are due after. These projects will be a consistent driver of growth for both the medium and long term as the cash flows continue to increase to support the very generous dividend that TransCanada rewards to its shareholders. There has also been talks of acquisitions as TransCanada is reported to be interested in Columbia Pipeline Group for a deal expected to be worth over $10 billion, I believe such a project would unlock value for investors in the long term as Columbia would add over 24,000 kilometers of U.S. gas pipeline to TransCanada’s portfolio. It is clear that TransCanada is focused on growing its pipeline exposure in North America and I believe management is very capable of delivering consistent growth over the long term. Risk: Government rejection of pipeline projects Barack Obama recently rejected the Keystone pipeline which was a huge opportunity for TransCanada to expand, this currently puts phase 4 of the pipeline on hold which consists of over 526 kilometers of new pipeline running through Montana. It is expected that this project may be reviewed at a later time but for now TransCanada will have to focus on expanding elsewhere. There is always the risk that further pipeline expansions will be rejected, although this is a setback – I do not believe that it will stop TransCanada from trying to expand in other areas in order to achieve top of the line growth. Decent Q4 2015 earnings despite energy headwinds TransCanada reported beat analyst expectations for EPS reporting $0.64 compared to $0.61, but missed for revenue as they reported $2.85 billion compared to $2.89 billion expected. TransCanada still had decent revenue growth due to growth in its natural gas pipeline division where it enjoyed a 6.3% growth to $1.49 billion, the energy division which saw 14.5% growth to $895 million and the liquid pipeline division which saw 7.8% growth to $469 million. TransCanada also increased its dividend by 8.7% to $0.56 per share which is a sign of confidence from the management. Safe and growing dividend when combined with share buybacks makes for a very attractive pick TransCanada has increased its dividend for over 15 years straight and I believe income investors should feel very comfortable holding onto this stock as its cash flow growth is very attractive and they are very capable of sustaining its high yield. Given the huge growth potential TransCanada expects dividends to increase up to 10% each year, this makes the stock a dividend growth hero that I believe every investor should consider adding to their portfolios. Warren Buffett is bullish on pipelines as he picked up a huge amount of shares in TransCanada’s competitor Kinder Morgan (NYSE: KMI ). Income investors should pick up the stock and its huge 4.7% yield as I do not believe the current weakness caused by energy woes will last forever. While there are risks of future pipeline rejections, I believe that these concerns will not slow TransCanada’s growth significantly. Dividend investors can sleep well feel safe holding TransCanada and its fat yield as it rebounds from the energy weakness in 2016. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Oracle Beats On Earnings, Ups Buyback: Tech ETFs In Focus

After the closing bell yesterday, tech bellwether Oracle (NYSE: ORCL ) reported mixed third-quarter fiscal 2016 results. The company beat the Zacks Consensus Estimate for earnings but missed on revenues due to negative currency translations and persistent weakness in traditional software sales. Additionally, Oracle boosted its share buyback program by $10 billion (see: all the Technology ETFs here ). Oracle Q3 Earnings in Focus Earnings per share came in at 59 cents (accounting for stock-based compensation), a penny ahead of the Zacks Consensus Estimate. Revenues declined 3.4% year over year to $9.01 billion and were below our $9.17 billion estimate. While the company’s long process of shifting to the Web-based cloud computing business is paying off, it is unlikely to make up for the decline in the software business. Additionally, a strong dollar is continuously posing challenges to the company’s performance. Excluding the impact of unfavorable currency rates, revenues would have grown 1%. Cloud software platform sales climbed 57% from the year-ago quarter and accounted for 6% of the total revenue. Notably, Oracle is selling more cloud software platforms than any other company in the world, providing it an edge over the software ace Salesforce.com Inc. (NYSE: CRM ). For the fiscal fourth quarter, the world’s largest database software maker expects revenues to be down 2% to up 1% in constant currency and earnings per share between 82 cents and 85 cents. The lower end of the earnings guidance is well above the Zacks Consensus Estimate of 78 cents, reflecting some optimism in the company’s future growth. Currency headwind is expected to impact 2% growth in revenues and dilute earnings per share by a couple of cents. Impressed by solid cloud computing growth and an earnings beat, the Board of Directors of Oracle authorized additional repurchase of as much as $10 billion of stock under its existing buyback program. As per Bloomberg, it is the first expansion of the repurchase plan since September 2014 (read: Face-Off: Dividend Growth & Buyback ETF ). As a result, Oracle shares climbed as much as 5.4% in after-hours trading. Smooth trading is expected to continue in the days ahead given that the stock has a Zacks Rank #3 (Hold) and a solid Industry Rank in the top 27%, suggesting room for upside. Given this, ETFs with the highest allocation to this software giant will be in focus in the days ahead. Investors should closely monitor the movement in these funds and avoid these if the stock drags them down: iShares North American Tech-Software ETF (NYSEARCA: IGV ) This ETF provides exposure to the software segment of the broader U.S. technology space by tracking the S&P North American Technology-Software Index. The fund holds a basket of 58 securities with Oracle taking the top spot at 9.3% of total assets. It is quite popular with AUM of $639.1 million while volume is moderate as it exchanges nearly 201,000 shares a day. The product charges 48 bps in annual fees and has lost 6.3% so far this year. IGV has a Zacks ETF Rank of 1 or ‘Strong’ rating with a High risk outlook. First Trust ISE Cloud Computing Index ETF (NASDAQ: SKYY ) This fund provides exposure to cloud computing securities by tracking the ISE Cloud Computing Index. Holding about 34 stocks in the basket, Oracle takes the fifth spot at 4.2% of assets. Software firms dominate this ETF, accounting for 37.5% share while Internet software services (16.7%) and communication equipment (13.5%) round off to the next two sectors. The product has been able to manage $531.3 million in its asset base while sees good volume of about 102,000 shares a day. It has 0.60% in expense ratio and has a Zacks ETF Rank of 2 or ‘Buy’ rating with a High risk outlook. First Trust NASDAQ Technology Dividend Index ETF (NASDAQ: TDIV ) This fund provides exposure to the dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $482.9 million in its asset base while trades in volume of around 83,000 shares per day. The ETF charges 50 bps in annual fees. In total, the fund holds about 96 securities in its basket. Of these firms, ORCL takes the seventh position, making up roughly 4.0% of the assets. In terms of industrial exposure, the fund is widely spread out across semiconductor and semiconductor equipment, diversified telecommunication services, technology hardware, storage & peripherals, and software. The fund has added 3.2% so far this year. PureFunds ISE Big Data ETF ( BDAT ) This product targets the niche corner – the big data and analytics industry – in the broad technology space. The fund follows the ISE Big Data Index, holding 32 securities in its basket. Of these, ORCL takes the sixth spot with 4% allocation. The U.S. firms dominate the portfolio with 81% share while Germany, Israel, Canada, and China make up for a decent exposure. The fund has accumulated $1 million in its asset base so far and charges a bit higher fee of 0.75%. Average daily volume is paltry at nearly 1,000 shares and BDAT is down 13.8% in the year-to-date timeframe. Link to the original post on Zacks.com

The Best And Worst Of February: Nontraditional Bond Funds

Nontraditional bond funds lost an average of 0.47% in February, bringing the category’s one-year returns through the end of the month to -4.06% versus 1.50% for the Barclays U.S. Aggregate Bond Index. As a result, investors pulled a total of $21.7 billion out of the category for the year ending February 29, bringing total category assets down to $125 billion. Despite this, there have been some stellar performers in the category: Six funds generated one-year returns in excess of +2%, but this represented just a small fraction of the 129 funds in the category with track records of at least a year. Meanwhile, 84 funds in the category suffered one-year losses of at least 2%, with 13 of those posting double-digit losses. Best Performers in February The three best-performing nontraditional bond funds in February were: The BTS Tactical Fixed Income Fund was the only mutual fund in February’s top three, edging out a pair of ETFs to rank as the month’s top performer. BTFAX returned +3.30% in the shortest month of the year, bringing its one-year returns to +1.37% for the year ending February 29. This was good enough for it to rank in the top 6% of its category, which may be why the fund received more than $84.7 million in inflows for the year. The fund’s one-year beta of 1.49 is high, but with its bullish returns, investors don’t seem to mind. ETFs from ProShares and Deutsche X-trackers took the second and third spots for February, returning +1.89% and +1.51%, respectively. Only the former has been around long enough to have a one-year track record, and it returned +0.86% for the year ending February 29, ranking in the top 1% of all nontraditional bond ETFs. It suffered $3.95 million in net outflows for the year, though, compared to the Deutsche fund, which received $6.25 million in inflows. Worst Performers in February The three worst-performing nontraditional bond funds in February were: Highland’s Opportunistic Credit Fund was February’s worst-performing nontraditional bond fund, and it was very near the bottom of the category for its one-year returns. HNRZX lost 4.86% in February, bringing its one-year losses through February 29 to a painful 32.16%. The fund’s beta of -1.02 indicates nearly perfect inverse correlation to the Barclays US Aggregate Bond Index, but its -36.09% one-year alpha better explains its woeful returns. Over the three-year period, the fund lost an annualized 7.70%, ranking at the very bottom of the category. Thus, it’s more than a little surprising that it enjoyed more than $5.9 million in inflows for the one-year period ending February 29. PIMCO’s Capital Securities and Financials Fund only launched on April 13, 2015. It lost 3.83% for the month. Coming in as the third-worst performing nontraditional bond fund is the Putnam Premier Income Fund, which returned -3.68%. Its one-year return through February 29 stood at -10.04%. Past performance does not necessarily predict future results. Jason Seagraves contributed to this article. Note: MPT statistics (alpha and beta) are calculated relative to the Barclays U.S. Aggregate Bond Index.