Why TC Energy Stock Is Down 9% in a Month

TC Energy (TSX:TRP) stock has fallen by 9% in the last month, as it continues to divest assets to strengthen its bottom line.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published April 17, 2024 9:00 pm EDT

| More on: TRP

Shares of TC Energy (TSX:TRP) were doing quite well and should have continued to do so after hitting the market bottom back in October. However, after rising steadily, the stock saw its shares drop 9% in the last month. So, let’s look at what happened and why this could mean investors are getting a deal.

oil and gas pipeline — Image source: Getty Images

What happened?

Investors were less than pleased to learn that TC Energy stock was selling its Prince Rupert Gas Transmission Limited Partnership at the end of March. The company announced it would be selling the gas transmission line to the Nisga’a Nation and Western LNG.

The transaction was outlined as part of the strategic priorities for 2024 for TC Energy stock. This would be to stay within the US$6 billion to US$7 billion annual net capital expenditure limit for 2024. Then, after 2024, it would maximize the value of its assets.

The deal was marked as a win for indigenous communities, and supports the long-term growth of the global emissions reduction targets. It would also bring in pre-tax cash equity of about $740 million. This will put the company well on track toward its $3 billion asset divestiture target for 2024.

Why the drop?

While the move isn’t unexpected, it comes after the company has had some rather unsettling news over the last few months. This includes the Keystone oil pipeline being offline due to operational issues. With a sale, the company will have even fewer products to sell.

Lately, the news has also led some investors to be on the lookout for the company’s first-quarter results. TC Energy stock is due to release these results on May 3. While it saw a strong 2023, it’s now the concern of shareholders that 2024 could be a bit more rough.

Now, shares are falling further as the company has more focus on renewable energy and less on oil and gas. Oil and gas remain the winners on the stock market these days as geopolitical tensions cause prices to rise higher.

What investors should do

With first-quarter results coming down the line in a few weeks, it’s likely best for TC Energy stock investors to take a wait-and-see approach. The company may indeed be able to demonstrate why these sales have left the company with a strong bottom line.

While that’s great, the company should also hopefully be able to demonstrate what they plan to do with the cash from these divestitures. If so, then it could be a great time to get in on the action with TC Energy stock.

After all, the company provides a whopping 7.74% dividend yield as of writing. It might also be expanding into renewables, but it still offers a solid pipeline network — one that will remain essential during this time when oil and gas from Canada are needed more than ever.

So, yes, TC Energy stock has been quite volatile over the last month or so. But see how the first quarter shakes out. This could lead to more growth for patient investors and even more for long-term ones.