All facets of this company’s natural gas operations are increasingly focused on the U.S., which helped to lift its overall earnings 22.2% in the most-recent quarter. The recent acquisition of a Washington, D.C., based utility will help drive future growth.

While the company recently cut its dividend by 56% to help pay down its debt as a result of that acquisition, that monthly payment still yields a high 4.9%.

ALTAGAS LTD. (Toronto symbol ALA; www.altagas.ca) processes, transports, stores and markets natural gas for producers. It also operates natural gas utilities and is a power generator, with gas-fired, coal-fired, wind, biomass and hydroelectric plants.

Apart from the company’s remaining 37% stake in AltaGas Canada (Toronto symbol ACI), almost all of its assets are now in the U.S. That in part reflects its July 2018 purchase of Washington, D.C.-based utility WGL Holdings Inc. for $4 billion.

For the three months ended December 31, 2018, AltaGas’s overall revenue jumped 131.8%, to $1.73 billion from $745.0 million a year earlier. The WGL acquisition drove the revenue gains.

Earnings in the latest quarter, excluding one-time items, rose 90.5%, to $120.0 million from $63.0 million. Per-share earnings rose 22.2%, to $0.44 from $0.36, on more shares outstanding from the WGL purchase.

AltaGas must continue to successfully integrate that acquisition. However, the process is going well, and WGL provides AltaGas with stable regulated utility cash flows as well as growth prospects.

Dividend Stocks: Planned asset sales should help the balance sheet

The company is on track to complete a number of planned asset sales to pay down debt resulting from the WGL purchase. To further lower that debt, AltaGas also cut its monthly dividend by 56.2%, to $0.08 from $0.1825, starting with the February 2019 payment. The shares nonetheless yield a high 4.9%. Together, these measures will shore up its balance sheet and sustain its dividend. They should also let it raise future payments.

On October 25, 2018, AltaGas bundled some of its Canadian utility and renewable energy assets into a separate company called AltaGas Canada Inc. (Toronto symbol ACI). It sold 16.5 million shares of the new firm to the public at $14.50 a share. AltaGas held onto 37% of AltaGas Canada’s shares.

That new firm holds the company’s Canadian rate-regulated natural gas distribution utilities and contracted wind power assets. In addition, AltaGas Canada holds roughly 10% interest in the Northwest Hydro Facilities in B.C.

Under the terms of the AltaGas Canada share issue, AltaGas must hold on to its 37% interest in the company until October 2019. After that, it can keep the shares, hand them out to its shareholders, or sell them on the stock market. The company hasn’t announced any plans yet, but it’s unlikely to hand out its 37% interest to its shareholders as a spinoff. Instead it’s more likely to hold onto this interest, or sell the shares in the market and use the proceeds to keep paying down its debt, or to expand its growth assets.

Recommendation in Stock Pickers Digest: AltaGas is a buy.