Friday’s TSX breakouts: This high dividend-paying stock appears poised to end downtrend

In today's TSX breakouts report, there are 38 securities on the positive breakouts list (securities with positive price momentum), while there are just two stocks on the negative breakouts list (stocks with negative price momentum).

Discussed today is a stock on the cusp of a technical breakout, Pembina Pipeline Corporation (PPL-T).

A brief outline is provided below that may serve as a springboard for further fundamental research.

The company

Calgary-based Pembina is a midstream service provider serving the energy industry. The company owns and operates pipelines that transport products derived from natural gas and hydrocarbon liquids. In addition, Pembina owns and operates gas gathering and processing facilities.

On Feb. 25, the company announced slightly lower-than-expected fourth-quarter results. Earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $260-million, below the consensus estimate of $267-million. However, the outlook is positive with solid growth forecast for the company.

Management anticipates achieving between $600-million and $950-million of potential annual EBITDA growth once its capital projects are all in-service. Management targets between approximately 15 per cent and 25 per cent compound annual growth in EBITDA through 2018.

The shares are dual-listed, trading on the Toronto Exchange under the ticker, PPL, and on the New York stock exchange, with the ticker PBA.

Dividend policy

Over the years, the company has steadily been increasing its dividend. From 2006 through to 2015, the compound annual dividend growth rate is 5 per cent. The company has increased its dividend each calendar year since 2012. Just last month, management announced a 4.9-per-cent increase to its monthly dividend to 16 cents per share, up from 15.25 cents per share. This equates to a yearly dividend of $1.92 per share, or an annualized dividend yield of 5.35 per cent.

Analysts' recommendations

According to Bloomberg, there are 11 buy recommendations and two hold recommendations. There are no sell recommendations. Analysts' target prices range from a low of $36 to a high of $50. The average one-year price target is $40, suggesting the stock price could appreciate 11 per cent.

The consensus EBITDA estimate is $1.18-billion in 2016, up from just under $1-billion in 2015, and forecast to rise to $1.47-billion in 2017.

Chart watch

The stock has been in a downtrend since September of 2014,  however the shares appear ready to breakout of this downtrend. The 50-day moving average (at $33.53) is just about to break above the 200-day moving average ($33.60), which would be a "golden cross", a bullish technical indicator.

Year to date, the stock price has appreciated 19 per cent. There is overhead resistance around $40, and after that around $43. There is downside support around $33.50, and failing that at $30, and then around $27, near its low in January 2016 (closed at $27.20 on January 18).

The relative strength index is at 65, suggesting the stock is not yet overbought. Generally, a reading at or above 70 indicates an overbought condition.

The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, and provides a brief technical analysis for a security to provide readers with more information.

If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

Below is a list of securities principally from the S&P/TSX composite index and the S&P/TSX Small Cap index that are technically breaking out, reaching new 55-day highs or lows. Securities on the positive breakouts list have displayed positive price momentum during this period. Securities on negative breakouts list have experienced negative price momentum.