TransCanada Corp (TSX:TRP)(NYSE:TRP) has been off to a strong start to 2019 with its share price up more than 22% and the stock now trading around its 52-week high. While investors may be a little concerned to invest in the stock given how volatile and uncertain the oil and gas industry is today, the company’s fundamentals remain very strong.
TransCanada’s revenues have shown good growth over the years with sales up more than 34% since 2014. Net income in 2018 was $3.7 billion and more than double what the company generated four years ago when the industry was still doing well. And if the Keystone XL can finally get going, the growth prospects for the stock could get even stronger.
Currently, the stock trades at a very modest 15 times earnings and just over two times its book value. Investors aren’t paying a premium to own the stock and they’re still able to lock in a solid dividend yield of 5% per year. That’s not a bad deal for one of the largest stocks on the TSX that could have a lot of upside if the industry is able to turn things around once and for all.
But even if things continue to stall, TransCanada could still prove to be a great dividend stock to own. It’s a great dividend growth stock that recently hiked its payouts yet again. In five years, quarterly dividend payments have grown from 48 cents to 75 cents, for an increase of more than 56% and a compounded annual growth rate of 9.3%. If that pattern continues, that could mean a lot of dividend income for investors.
