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TC Energy Corp TRP

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Morningstar’s Analysis

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Economic Moat


Capital Allocation


In TC Energy's Q3, Strong Investment Outlook Leads to Lower Dividend Growth

Stephen Ellis Sector Strategist

Analyst Note

| Stephen Ellis |

TC Energy’s third-quarter results placed the firm on track to meet our full-year expectations, so we plan to maintain our fair value estimate and narrow moat rating. The firm is now guiding to lower dividend growth of 3%-5% annually compared with 5%-7% previously, but we think it is for a very good reason. U.S. peers are struggling to find good projects to invest substantial capital behind, but TC Energy does not have that problem. With the struggle to find good projects, U.S. peers are being challenged on how to effectively return capital to shareholders while addressing balance sheet concerns in some cases. In contrast, TC Energy’s capital allocation approach has been reasonable and consistent for decades, and we don't see this shift as breaking that pattern. Broadly, the firm sees such strong investment opportunities across its asset portfolio, including renewables and low-carbon efforts, that it needs to free up cash to pursue these attractive opportunities.

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Company Profile

Business Description

TC Energy operates natural gas, oil, and power generation assets in Canada and the United States. The firm operates more than 60,000 miles of oil and gas pipelines, more than 650 billion cubic feet of natural gas storage, and about 4,200 megawatts of electric power.

450 - 1st Street SW
Calgary, AB, T2P 5H1, Canada
T +1 403 920-6411
Sector Energy
Industry Oil & Gas Midstream
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 7,283