The Canadian fairness markets have made a shiny begin this month, with the S&P/TSX Composite Index rising by 1.6%. Earlier this month, the Labor Division introduced that the US payroll elevated by 236,000 in March, which was beneath analysts’ expectation of 239,000. Amid the indicators of the job market cooling, buyers hope the Federal Reserve may undertake liberal financial insurance policies. So, the advance in buyers’ sentiments seems to have pushed the fairness markets increased.

Nevertheless, geopolitical tensions and better rates of interest are causes of concern. So, I count on the fairness markets to stay risky for the remainder of this yr. On this risky outlook, investing in high-yield dividend shares is prudent, as one can earn a steady passive revenue, no matter the market motion.

In the meantime, I imagine TC Vitality (TSX:TRP) is a perfect purchase for income-seeking buyers, given its stable monitor file of elevating dividends, excessive yield, and enticing valuation. In the meantime, the corporate posted a wholesome 2022 efficiency in February. Now, let’s have a look at its 2022 efficiency and development prospects.

TC Vitality’s 2022 efficiency and development prospects

Final yr, TC Vitality’s asset utilization price rose amid geopolitical tensions and growing power demand. It posted file deliveries in Canada and the US pure fuel methods throughout that interval. Supported by stable execution, the corporate’s adjusted EBITDA (earnings earlier than curiosity, tax, depreciation, and amortization) rose by 5.7% to $9.9 billion. The corporate generated $6.4 billion of money from its operations.

Regardless of the difficult macro elements, the corporate’s administration hopes to keep up its upward momentum this yr. Supported by its stable execution, the corporate has elevated its market share in the US LNG (liquefied pure fuel) feed fuel from 25% to 30% and is on monitor to boost its share to 35% by 2025.

After placing round $5.8 billion of tasks into service final yr, TC Vitality expects to place round $6 billion of tasks into service this yr. It has dedicated to creating a capital expenditure of $11.5-$12 billion this yr, which may strengthen its asset base. Amid these development prospects, the corporate expects its adjusted EBITDA to develop by 5-7% this yr.

TC Vitality has adopted a $34 billion secured capital program, which may develop its adjusted EBITDA at a CAGR of 6% by means of 2026. So, the corporate’s long-term development prospects look wholesome.

Dividend and valuation

With regulated belongings and long-term contracts producing 95% of its adjusted EBITDA, TC Vitality’s money flows are steady and predictable. Supported by stable money flows, the corporate has been elevating its dividends uninterrupted since 2000. Presently, it pays a quarterly dividend of $0.93/share, with its yield for the following 12 months at 6.7%. Moreover, amid its wholesome development prospects, the corporate hopes to boost its dividend at a CAGR of 3-5% over the following few years.

Nevertheless, TC Vitality has been beneath strain over the previous few months. The corporate witnessed one of many worst spillages in its historical past at its Keystone Pipeline System in December. In the meantime, the corporate may incur bills of round US$480 million to scrub it up. These elevated bills and rising rates of interest have led to a selloff, with the corporate shedding over 25% of its inventory worth in comparison with its 52-week excessive. Amid the steep pullback, the corporate’s NTM (subsequent 12-month) price-to-earnings a number of stands at 12.8.

Traders’ takeaway

Regardless of the near-term volatility, TC Vitality could be a superb addition to your dividend portfolio amid its steady money flows, wholesome development prospects, enticing valuation, and excessive dividend yield.