This green power stock has moved down in the past few months. That’s mainly because the likelihood of higher interest rates has increased the appeal of fixed-income investments. However, new projects should provide more cash for dividends.
The stock trades at just 16.2 times the company’s 2022 earnings forecast.
ALGONQUIN POWER & UTILITIES CORP. (Toronto symbol AQN; www.algonquinpower.com) has two main businesses: the Regulated Services Group provides regulated electricity, gas, water distribution and wastewater collection services in Canada, the U.S., Chile and Bermuda; and the Renewable Power Group produces electricity from about 40 clean-energy plants in North America.
Through your Algonquin shares, you also tap its 44.2%-owned Atlantica Yield plc (symbol AY on Nasdaq). It operates renewable energy assets in Europe, North and South America, and Africa.
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In the quarter ended June 30, 2021, revenue jumped 53.5%, to $527.5 million from $343.6 million a year earlier. (All figures except share price and market cap in U.S. dollars.) Per-share cash flow rose 44.4%, to $0.26 from $0.18.
Algonquin raised its quarterly dividend with the July 2021 payment to $0.1706 U.S. a share from $0.1551 U.S. The new annual rate of $0.6824 U.S. yields a high 4.7%.
Dividend Stocks: Large spending should continue to generate more earnings
The company’s outlook remains strong. It plans to spend $9.4 billion (all figures except share price and market cap in U.S. dollars) on new projects between 2021 and 2025. About two thirds of that will go to regulated businesses, which cuts your risk.
Over the past few years, Algonquin has also added value for investors with its push into more North American markets as well as select international ones. Most recently, it spent $365 million for Bermuda Electric Light Company, the island country’s sole electric utility. Bermuda Electric supplies power to 36,000 customers.
While expanding by acquisition adds risk, particularly in foreign countries, Algonquin’s new operations are rate regulated; they also immediately added to its earnings.
Those investments will lift Algonquin’s earnings by roughly 15% to $0.88 U.S. a share. The stock trades at a reasonable 16.2 times that forecast.
Recommendation in Dividend Advisor: Algonquin Power & Utilities Corp. is a buy.
Comments
Douglas
What did I miss in the logic behind their recent purchase of Kentucky Power. They obtained a 50% interest in a gas powered plant and a large older coal -powered generating plant. The seller is using the fu ds to build more wind and solar and avoided issuing dilutive new shares to fund their green growth by selling these less and non-green older facilities to Algonquin
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What did I miss in the logic behind their recent purchase of Kentucky Power. They obtained a 50% interest in a gas powered plant and a large older coal -powered generating plant. The seller is using the fu ds to build more wind and solar and avoided issuing dilutive new shares to fund their green growth by selling these less and non-green older facilities to Algonquin
What about Kentucky Power the ungreen utility?
This is a important acquisition for Algonquin in a key market with long-term growth potential.