Altagas Ltd. (TSX:ALA) stock fell 0.44% on November 12. Shares have plunged 45.2% in 2018 so far and the stock has reached a 52-week low of $14.25 in early November. The company released its third-quarter results on October 30.
Altagas closed its $9 billion acquisition of WGL Holdings in the third quarter and reported normalized funds from operations of $117 million.
The company has also exceeded its targeted assets sales, reporting $2.4 billion in announced sales at the quarter’s end. Altagas plans to undertake asset sales between $1.5 billion and $2 billion going forward in order to fund capital projects and align its business with its strategic vision.
As part of its plan to optimize the cost of capital, the company announced the suspension of its Premium Dividend Reinvestment Plan at year end. Altagas currently boasts a dividend yield around the 15% mark, which is poised to be lowered in the coming quarters.
The scuttling of its DRIP marks a worrying progression for investors, and there are broader concerns in the market.
Oil and gas prices have been punished in November and suffered a further drop on November 12 after U.S. President Donald Trump took aim at OPEC.
Saudi Arabia has floated a production cut in the face of lower prices, just as OPEC had recently agreed to ramp up production. On the other hand, U.S. producers are ramping up production on their end which will likely exacerbate oil’s plunge.
Altagas’ reorientation is promising, and its stock is enticing at its current price. Investors on the hunt for discounts and high dividends may want to stack slowly, but should be prepared for volatility in this sector in the near term.
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