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For TransCanada, A Lot At Stake In Keystone XL Vote

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No other company in IBD's dividend leaders screen has as much at stake in Washington, D.C., thanTransCanada ( TRP ).

The company is the builder of Keystone XL, the polemic oil pipeline from Alberta to Nebraska, which will eventually enable Canadian-produced crude to reach the Gulf coast.

The final section of the 1,179-mile project was approved by the U.S. House of Representatives on Friday and headed to a vote in the Senate on Tuesday.

Even if the Senate passes it, President Obama may veto the proposal. Last week, he criticized the project, saying it would not lower fuel prices.

Keystone XL also faces heavy protests from environmentalists and other groups.

TransCanada says it will cost $8 billion to complete the pipeline, up from an earlier estimate of $5.4 billion. The company has already spent $2.4 billion on Keystone.

The 3-foot-wide pipeline will have the capacity to carry up to 830,000 barrels of oil a day to refineries in the Gulf Coast and the Midwest.

It would take at least until 2017 for the pipeline to become operational.

Fees charged on users of Keystone XL could boost TransCanada's profits by as much as $300 million a year, according to an estimate from a CIBC analyst quoted in Forbes.com.

Last year, TransCanada's net income totaled $1.79 billion.

The company's earnings performance has fluctuated, but it still resulted in an IBD Earnings Stability Factor of 7, near the steadiest end of the scale.

TransCanada, which holds its annual investors day Wednesday in Toronto, pays a dividend that works out to an annualized dividend of more than 3%. The exact payout is tied to the exchange rate. The dividend has been raised each year since 2000, according to TransCanada's website.

TransCanada's U.S.-traded shares are forming a base, although the pattern has a lot of work left before reaching a buy point.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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