Q: Altagas was recently recommended on BNN as a top pick. I see analysts have established a $31 price target. What are your thoughts?
5i Research Answer:
ALA is recovering from some tough years (and a dividend cut in late 2018. The dividend is still not back to the prior level, even with some recent increases. Operartions have improved, but there is not a lot of growth here. About 5% growth is expected in 2024. Debt is high, and the payout ratio is about 75%. But it is valued attractively, at 11X earnings. While we would consider it today 'OK' for income, we would not consider it in the 'top pick' category at all.