Then and Now – TransAlta

Then and Now – TransAlta

This post is a continuation of my series Then and Now where I revisit some older blogposts and either rip them to shreds (because my thinking has changed) or I’ll confirm my position on some personal finance topics or specific investments. This post is about TransAlta. 

My previous post was about Enbridge where this stock has gained over 100%.

This post tells a very different tale, one of some regret. This was a great lesson in being overconfident in any one stock. Another good reason to diversify including into low-cost ETFs.

TransAlta then:

  • I started writing about TransAlta on this site back in 2010.
  • TransAlta stock was just over $20 when I purchased it.
  • I purchased enough stock to start running a synthetic DRIP, whereby when the dividends are paid, the money is reinvested to buy at least one more full share each quarter commission-free.
  • I ran the DRIP for a couple of years then stopped.
  • Since early 2012, TransAlta stock has been a mess.
  • TransAlta cut their dividend in February 2014 by 50%.

TransAlta now:

  • TransAlta share price is just over $13.
  • I continue to hold some TransAlta stock but I’ve lost money.
  • I continue to collect the TransAlta dividends paid in cash.

My decision to buy (and hold) TransAlta was downright foolish when compared to other companies I should have purchased. 

I will probably continue to own** this company until a) there is a buyout and/or b) until I can use the money to offset capital gains incurred. 

**Updated – I no longer hold this company – selling all my TA stock in late-2014** I moved all my remaining proceeds, selling at a small loss unfortunately, into renewable stocks. 

Not every individual investing decision comes up roses and this is my best example of a stock selection mistake in recent years. 

Did you ever own TransAlta stock?  Do you still own TransAlta stock?

What do you make of this investing blunder?  What should I do?

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

38 Responses to "Then and Now – TransAlta"

  1. HI Mark – I too bought TransAlta some time ago. I got in at 13.30 because it was a big fat juicy dividend and of course it got hammered. The value plummeted, dividend cut, you know the story. I’ve held it and still hold it although I’m now thinking of ditching it and was considering AQN but was also looking at FTS for a bit more of a diversified customer base. Both are good – it may come down to which is a bit weaker when I pull the trigger or simply a coin toss!

    1. I hear ya Marty. It was tough to see TA go down in my portfolio as well and I’ve made some investing mistakes with stocks – no doubt. TA was one of them for sure.

      Big fan of AQN, FTS, along with many others like EMA, INE, CPX. Boring companies that deliver essential services.

      1. Marty, keep the faith, I’ve held TA since 2015. The energy shift is well underway and as Fox Mulder said, I want to believe -TA is coming UP! Also have had AQN and FTS for several years. Gleaned some great advice from this website, thanks Mark.

  2. I was just looking at buying some TransAlta…7.5% div, when I came across this.
    Hmmm, perhaps the 7.5% div is a result of shares here being in the investor ‘sinbin” for past transgressions?

    Or is the Co a POS?

  3. TransAlta is a basket case!

    … but, my bet is that Warren Buffett will buy them (don’t expect a big premium) …

    Why Buffett? Berkshire Hathaway has partnered with TransAlta on some initiatives over the last couple of years… I think he is kicking the tires right now….

  4. Been lookin at Transalta but it makes me nervous. The dividend cut raised a big red flag and scared many off. I would still hold it because energy stock on the whole have a great long term outlook so I would def ride it out especially since they are paying still a good dividend.

    Good Day and Grind On!

    1. This is where I struggle as well…I can see TA churning out dividends for another 10+ years, if not more. Maybe a buyout and I get a premium. Thanks for the ride it out advice!

  5. I’d probably hold it to until I could collect some of the loss then run. It’s interesting to read how you go back and evaluate what you once thought was great. Investing is risk like anything else no matter what way we look at it. Sometimes we win, sometimes we lose. We just hope we don’t lose more than we win or don’t lose the shirt off our backs. Don’t sweat it though, you’re a smart guy and I’m pretty sure there is a learning curve with investing just like everything else in life. At least, you are doing it on your own. I envy that. Cheers mate.

    1. This is where I’m leaning…hold it until I could collect some of the loss on my gains. I need to claim some gains next year, which would be the time to sell.

      I’ve won with many stocks far more than I’ve lost, so that’s a good thing in the last 5 years. I’ll make some more mistakes in the future but I’m hoping I’ll make less and less of them over time.

      Thanks for the comment Mr. CBB!

  6. I don’t own Trans Atlanta individually but I do own some ETFs that have it, so I guess through that, I do!

    I do own one stock that has dropped significantly since I bought it. Luckily I’ve not had it that long so there is hope for it yet, and it seems to be creeping back up. I’ll just hold it and see what happens for awhile.

    1. For sure, many CDN ETFs own TA and probably win for the yield, that is 5%+. That is a challenge with stocks Daisy, some go up, some go down and you have to be willing to hold such stocks for many years, otherwise, the stock isn’t worth buying in the first place.

  7. TA was a good stock that was recommended by many pundits. I had some and lost about 20% before I sold it. Yea, it sucks but I figure that 1 or 2 out of 10 investments won’t work out, so you have to accept that and cut your losses when you start to see them stinking up the joint. If your winners outperform the losers, then you should be OK in the long run.

    1. You’re right Peter, it was recommended. I’ve been fortunate to be way up in many cases with my picks with no intention of selling them, so to your point, far more winners than losers. TA is my biggest loser in recent years, and it just sucks to see the loss but this can be a good thing to offset some major gains next year if I decide to sell. I guess there is a silver lining… 🙂

  8. I don’t own Transalta but if I did, I’d probably continue to hold until I could collect enough in dividends to recoup at least part of the (potential) loss. You mentioned capital gains – if you have some gains in non-registered accounts, then that makes it even more tempting to sell since the capital loss could offset the capital gains

    1. I’m tempted to hold TA and collect the cash for now. Yes, I have capital gains (non-reg.) so if I decide to claim some gains, then I will sell TA to offset those. That is the plan for next year when I potentially move some non-reg. stocks to my TFSA.

    1. PFE has been doing well BCM?! I would continue to hold POW as well, that’s just me. I guess we all have some investing skeletons, well, most of us do!

  9. If you owe XEI or XDV dividend etfs or the broader market XIC you own TA! It is a large company included in the S&P TSX 60 Index so probably most people have it in their portfolio such as everyone who likely has its etf replication XIU. But, if you’re diversified and not concentrated in your equity portfolio you shouldn’t have lost much and still you’re getting a sizeable dividend which is likely now sustainable! Alberta’s economy is sizzling and electricity requirements will increase and so will the price.

    1. Yes, XEI, XDV, XIU and XIC and many more dividend and equity ETFs have TA in their portfolio, you are correct. I suppose if you look at it that way…owning it directly as long as the amount isn’t too much, isn’t a bad thing since the downturn of TA is largely, well, it is, offset by other major gains in my portfolio.

      I own about 30 CDN stocks, most of XIU actually, so I am somewhat diversified from the CDN perspective. I need more U.S. and international holdings though.

      Alberta’s economy is humming along nicely, I wonder if TA will rebound?

      Thanks for the comment Harvey.

      1. It was (still is) investment dogma to own foreign domociled companies. That made good sense when countries had isolated economies! But now, most companies are multinational since we have become a global village in business practice and free trade. Consequently, I own only Canadian companies because many of them even utilities carry on business in many countries. True, I may be missing certain sectors but nothing is perfect. I find it simpler and there’s much solace in that :)! Do you feel strongly that you need international equities since stock exchanges move together and it’s far easier to learn the domestic market?

        1. Well, I feel I need to own more US and International stocks/equities since Canada is such a small market on the big stage. I think if I can get about 50% of my portfolio into US/International equities and the other 50% in CDN assets, that’s pretty good I think.

          You’re right, there is no perfect portfolio but diversification is always a good thing. That’s just my take.

          The problem I see going forward for me, is how to manage the U.S. stocks and ETFs. I will probably hold the U.S. stocks eventually in an US-dollar TFSA, pay the 15% withholding tax on dividends but everything else is tax-free dividends and capital gains are sheltered.

          Oh, it is easier to understand our domestic market…I don’t have time to follow the others truth be told!

          1. Definitely sucks to have a loser, especially in a TFSA since you cannot claim capital losses within it:(

            I would suggest if you wanted to go into US stocks, to hold them within an RRSP instead, since you will avoid those pesky US withholding taxes within it from US companies. So long as you are still accumulating the assets for the next 10years or so its probably worth it since your investments will be able to grow for a decent period of time 100% tax free.

            1. Thanks for the comments Wisp! The loser is in my non-reg. account, so I can claim capital losses (eventually). The TFSA has ETFs and REITs. The RRSP has U.S. stocks but I do not include the RRSP in these updates since I must eventually sell or withdraw some RRSP money. I’m not forced to wind down the non-reg. or TFSA – which is a great thing 🙂

  10. I owned this stock very briefly when I first started investing in individual stocks. I was focused more on high yield than on the ability to grow dividends, but quickly came to my senses.

    I know it’s hard to sell your losers, but you have to ask yourself if the $5000 (or whatever) you have invested in TransAlta right now wouldn’t be better served somewhere (anywhere) else. Forget what you paid, forget what you lost, and pretend you just have that money sitting in cash and need to decide what to do with it.

    1. I think we thought the same about this stock early on got out, I didn’t. I have just over 100 shares in the TA stock, I’ll consider your decision…you sound like another reader Gary. 🙂

  11. don’t be sad mark. i bought penn west petroleum for around $14. and kept it for 3 years. my wife made me sell it last month for $10.90 — yuk. if thats the only loss i ever take i guess i’m very fortunate. it was in my tfsa so that was a double whammy!!! don’t keep ta too long.

    1. Thanks Gary. I’m tempted to hold it for a bit before selling to offset some gains that I’ll incur next year, moving some holdings from non-reg. to max out the TFSA in 2015. Then again, maybe I will just collect the 5.5%+ dividend and use the cash elsewhere for a few years. *sigh*


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