Calgary-based TransCanada Corp. expects its dividend to increase eight to 10 per cent annually through to 2021, the company announced in a news release on Tuesday.
The announcement came before the company hosted its annual Investor Day in Toronto, where it was providing an financial update and reviewing strategic plans for its natural gas pipelines, liquids pipelines and energy businesses in Canada, the United States and Mexico.
“Our $94-billion portfolio of energy infrastructure assets are expected to generate record financial results in 2018 underpinned by strong market fundamentals,” said Russ Girling, TransCanada’s president and chief executive officer, in a statement. “Looking forward, we will continue to advance $36 billion in commercially secured projects through 2023 that will expand and extend our asset footprint across North America.
“Based on the confidence we have in our business plans, we expect to grow our common share dividend at an average annual rate of eight to 10 per cent through 2021. Notably, our dividend outlook is supported by expected growth in earnings and cash flow and in line with our historically strong dividend coverage ratios.”
The company said it expects comparable earnings before interest, taxes, depreciation and amortization (EBITDA) to grow to about $10 billion in 2021, a 35 per cent increase when compared to comparable EBITDA of $7.4 billion in 2017 and 95 per cent of comparable EBITDA is expected to come from regulated assets or long-term contracts.
“At the same time, the company continues to methodically advance more than $20 billion of projects under development. They include Keystone XL and Bruce Power life extensions as well as numerous other organic growth opportunities that are expected to emanate from TransCanada’s five operating businesses across North America,” it said.
“With approximately $10 billion of new projects expected to enter service by early 2019, we are well positioned to fund the remainder of our secured capital program through internally generated cash flow, access to capital markets and further portfolio management activities,” said Girling.
“We view the issuance of common shares under our at-the-market equity program as being complete at this time but expect to operate our dividend reinvestment program for some portion of 2019. This will allow us to continue to prudently fund our significant capital program in a manner that is consistent with achieving targeted credit metrics that support our strong credit ratings. Going forward we will continue to evaluate share count growth against further portfolio management activities.”
TransCanada operates one of the largest natural gas transmission networks that extends more than 91,900 kilometres (57,100 miles), tapping into virtually all major gas supply basins in North America. TransCanada is a leading provider of gas storage and related services with 653 billion cubic feet of storage capacity.
A large independent power producer, TransCanada owns or has interests in approximately 5,700 megawatts of power generation in Canada and the United States.
TransCanada is also the developer and operator of one of North America’s leading liquids pipeline systems, which extends approximately 4,900 kilometres (3,000 miles), connecting growing continental oil supplies to key markets and refineries.