TransCanada Corp, Canada’s second largest pipeline operator, said on Wednesday that it planned to double its dividend growth rate through 2017 as it brings about C$13 billion ($11.47 billion) worth of small and medium-size projects on line over the next five years. The Calgary-based company said it will increase its dividend by at least 8 percent a year over the next three years, up from a current rate of 4 percent a year, with the growth rate expected to accelerate later this decade as larger projects come on line. Chief Executive Russ Girling said the growth rate could reach 10 percent or more “through 2017 and beyond.” TransCanada’s shares were up 3 percent at C$57.67 in Toronto on Wednesday.
TransCanada also addressed new calls from activist investor Sandell Asset Management Corp for an overhaul of its business, including a breakup of the pipeline and power segments. “We continually look at structural alternatives for the company. However, there wasn’t anything in those proposals that we haven’t already thought about and discussed with our shareholders,” Girling said at an annual investor meeting in Toronto. He reiterated that the company is better off diversified and should stay the course on its existing growth strategy to maximize long-term shareholder value.
The bulk of the company’s major growth through 2020 is pegged to five key but risky oil and natural gas pipelines, including the Keystone XL project. A bill to approve the Keystone XL pipeline failed in the U.S. Senate on Tuesday. Girling said he remains hopeful about the long-delayed project, which would ship more than 800,000 barrels of oil a day from Alberta’s oil sands through Nebraska to the Gulf of Mexico. TransCanada also said it expects a decision on its Energy East project from Canadian regulators by mid-2016, with the 4,600-kilometer (2,858 mile) line from Alberta to Eastern Canada projected to be in service by the end of 2018.
(1 U.S. dollar = 1.1337 Canadian dollar)