June 13th, 2010 | 
Category: Just Energy is another energy player that I have been following. It received a mention on Business News Network on Friday during market call and prompted me to look at it again. It is still an income trust with a very nice dividend yield of 9.44%. Its primary business is in the delivery of gas and electricity to residential and commercial consumers in Canada and the United States. What I like about the business is that it has consumers paying regularly. When their customer base grows, so do their growth.
Fact Sheet
- Currently pays a healthy dividend of 9.44% and will retain it upon conversion to a corporation. Here is a link to their press release.
- Will convert to a corporation on January 1, 2011.
- Excellent year over year growth of their dividends as you can see below in the graph.
- Participates in full DRiP with Computershare.
- Currently trading just above mid-range within the last 52 weeks.
- Market capitalization at 1.64B$. Still a small cap. player but growing.
- Relatively low P/E of 7.335.
Just Energy dividend growth graph
1 year chart with the TSE S&P Composite index
Competitors
Its main competitor in Canada is Gaz Metro (GZM.UN) with respect to market capitalization. Gaz Metro has a 1.90B$ market cap. at the moment. There are obviously other major players in the field such as Fortis and Enbridge along with some provincial providers for electricity.
Below is a chart comparing Just Energy to GZM.UN. Gaz Metro plans on deciding and executing on their decision by October 2010. The delayed timeline is to allow GZM.UN to leverage the current tax benefits as an income trust for as long as possible.
Thoughts
I do not own this company. I am very interested though. Up until recently, I was merely tracking it due to its healthy dividend. Knowing that they will retain their dividend upon conversion, I feel it is worth considering as a future investment.
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Wow! That looks like a company worth grabbing. Are you going to buy shares?
I'm too thick-headed to understand how an operation like this really works, but I want to live vicariously through your success.
Let us know when you buy shares!
Andrew
This post made me look at it seriously. Because it deals mostly with consumers and not with oil field, I am seriously considering it. It's a subscription platform just like all the other utilities and phone / cable / internet business. They buy the electricity and gas at price X and sell it a price Y. The CEO is a major shareholder, whenever the dividends go up, she benefits too.
I would like to apply a bit of your analysis to it and look at their historical EPS and consumer growth year over year.
I still have more research I would like to do, but I could start slowly in a Full DRiP account with Computershare.
Hey Passive,
I don't own this company either, but I'm VERY tempted to put about $1-2K of my 2011 TFSA contribution towards it. They have a great history of dividends and you're right, they said they will keep their distributions (the same) after they convert to a corporation. I also included them in a post last month:
http://myownadvisor.blogspot.com/2010/05/are-income-trust-changes-just-like-y2k.html
You're also correct, they have a full DRIP but the big BUT here is, it's a $500 minimum contribution to run it. Unfortunately too much for me, as I want to contribute to other DRIPs that have no minimums.
Do you know about this site – you'll like it:
http://cdndrips.blogspot.com/
JE.UN vitals are there.
Keep up the good posts
@Financial Cents
I use this website http://www.dripprimer.ca/canadiandriplist. It's well organized. I had not looked at the minimum yet but you are right that 500$ is a little steep. At least, you only need about 2K$ to drip a share per month. That's pretty nice.
[...] look at a higher yield stock. I am going to take Just Energy (JE) which is involved in the sale of natural gas and/or electricity in a number of provinces in Canada [...]