Is Algonquin Power & Utilities (TSX:AQN) a good dividend stock to buy?

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Is Algonquin Power & Utilities (TSX:AQN) a good dividend stock to buy?

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 Is Algonquin Power & Utilities (TSX:AQN) a good dividend stock to buy?
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Highlights

  • Algonquin issued quarterly dividends of US$ 0.171 apiece to its shareholders.
  • AQN offers dividend yield of 4.17 per cent
  • The five-year dividend growth is 9.29 per cent.

Algonquin Power & Utilities Corporation (TSX: AQN) announced a 10 per cent increase in annual dividends in the first quarter of fiscal 2021 to mark the construction of the clean and renewable energy program.

It issued quarterly dividends of US$ 0.171 apiece to its shareholders on July 15, 2021. The dividend yield offered is 4.17 per cent, while the five-year dividend growth rate is 9.29 per cent.

The company, on June 18, 2021, had announced a public offering of US$ 1 billion equity, subjected to market risk and condition. 

AQN stock performance and dividends

The C$ 12.19-billion company is engaged in generation, transmission, and distribution of cost-effective and sustainable energy.

The energy scrips are trading nearly 12 per cent below its 52-week high of C$ 22.67 apiece attained on February 16, 2021, and up nearly 14 per cent above its 52-week low of C$ 17.48 apiece on August 14, 2020. The stock closed at C$ 19.88 apiece on August 3, 2021.

The stock price climbed is down by nearly 9 per cent over the last six months. However, it gained 8 per cent in the past year. On a year-to-date (YTD) basis, the stock is down nearly 5 per cent.

The investors were paid quarterly dividends of US$ 0.171 apiece on July 15, 2021. The historical dividend yield was 4.17 per cent.

The three-year dividend growth rate has been 8.66 and whereas the 5-year dividend growth rate stood at 9.29. The historical payout ratio on a full-year basis has been 44.89, and the five-year average payout ratio is 71.15.

AQN stock fundamentals & bottomline

The quarterly report posted revenue of US$ 634.5 million in the first quarter of fiscal 2021, increasing by 36 per cent year-over-year (YoY). The adjusted EBITDA stood at US$ 282.9 million, up 17 per cent YoY.

Thus, the net income attributable to shareholders stood at US$ 13.9 million, recovered from the net loss position in Q1 FY2020. An increase of 122 per cent YoY is attributed.

As per the press release, the board of directors approved a 10 per cent increase in dividends in the backdrop of the 1600 megawatt renewable energy construction program.

Three wind projects comprising a total of 600 MWs will be functional soon. This initiative is expected to reduce CO2 emissions annually.

On April 9, 2021, the energy company issued C$ 400 million senior unsecured debentures to maturing on July 15, 2031, to be used as per the green financing framework.

The company registered earnings per share (EPS) of 1.97, the price-to-earnings (P/E) ratio of 10.10, and the debt-to-equity (D/E) ratio of 1.25.

Furthermore, the return on assets (ROA) stands at 6.51 per cent, and return on equity (ROE) stands at 19.79 per cent.

Bottomline

Algonquin’s financials and the stock fundamentals look largely stable. Alongside rising revenues and, the company has also steadily hiked dividends over the years. With the world moving towards renewable energy sources at an exponential rate, Algonquin revenues may further expand. This may equip the organisation to continue raising dividends in the coming years.

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