Calgary-based TransAlta Corp. is an electric utility with operations in the western part of Canada. The company generates power using coal, hydro, gas, geothermal and wind. About 70% of power generated is sold under government mandated long-term contracts. From their corporate site “TransAlta has been in the power business for almost 100 years – our output from more than 50 power plants is more than 8000 Megawatts – enough to power almost 7 Million homes”

TransAlta(TAC) is the only Canadian utility that is part of the S&P; ADR Index.

The current dividend yield is an excellent 5.22% and the company has modest growth over the years since it is a utility. Average annual earnings growth over the last 5 years is 7.50% and the profit margin is about 10%. In 52 weeks, TAC is down 39% – which is high compared to other utilities. The P/E of 18.99 is much higher than the industry average of 13.73.

TAC received an acquistion bid from LS Power Equity Partners, an entity associated with Luminus Management LLC, and Global Infrastructure Partners which valued the company at C$39 per share in cash. On August 6th, TAC’s board rejected the proposal saying that the offer undervalued the company. Currently the stock trades at C$25.25 in the TSX – much lower than the offer received back in July.

Compared to some US and European utilities, TransAlta is an average performer over the long-term. However if an investor is looking to invest in a Canadian utility this is one option.