Newalta Announces It Is Becoming a Corporation

Canada's leading industrial waste management and environmental services company, Newalta (NALUF.PK) has announced it is converting to a corporation. Newalta plans to eventually pay a quarterly dividend of C$0.20/quarter (eligible dividends), this represents a yield of 8.9% on Tuesday's closing price.

Newalta also announced a 5% rise in earnings per share and that they are cutting their cap ex growth budget by 30% for 2009. Half of Newalta's growth as a company to date has been through about 50 successful acquisitions.

Here are some highlights of Newalta's distribution history:

• March 2003 - Monthly distributions initially set at C$0.09 per unit at conversion.
• Sept 2003 - Distributions were increased to C$0.10.5 per unit.
• March 2004 - A further improvement was made to C$0.12.5 per unit.
• March 2005 - Distributions reached C$0.15.0 per unit.
• Nov 2005 - They were raised to C$0.16.5 per unit.
• May 2006 - Most recently, distributions were increased to C$0.18.5 per unit.

Newalta has shown some pretty impressive growth of the distribution since 2003, which should be noted was boom time for the oil and gas industry which Newalta relies on for a large part of their revenues (47% to be exact).

I like the Newalta story, as I believe this should be a stable and growing business and we move into a future of heightened environmentalism and attention toward the better management of waste and recycling programs. I actually had a close look at Newalta last year when I was selecting income trusts for my portfolio as part of our maternity leave strategy, where I ended up selecting Inter Pipeline [IPL.UN] and Yellow Pages Incom Trust Units [YLO.UN] instead. At that time I ruled out Newalta because of its heavy reliance on the cyclical oil and gas industry. This is certainly one to keep an eye on as we move into 2009.