You’re getting the best of both worlds with Algonquin Power (Algonquin Power Stock Quote, Chart TSX:AQN), according to First Avenue Investment’s Kash Pashootan, who says the company is growth-oriented and yet supplies the safety of a healthy dividend, which is enough to warrant it Top Pick status.
“Algonquin unlike some of the other utilities has some meaningful growth potential,” Pashootan, CEO and chief investment officer at First Avenue, told BNN Bloomberg Thursday. “We saw them do that acquisition of Atlantica Yield. They took sort of an appetizer position, I’ll call it, and then they liked what they saw and beefed up their equity ownership from about 25 per cent to 41.5 per cent.”
“We like some of the growth prospects for Algonquin Power, in addition to the defensiveness that you get with a utility and that steady cash flow through the dividend,” he says.
Last November, Algonquin completed its purchase of an additional stake in UK-based energy assets company Atlantica Yield, to the tune of $345 million, with CEO Ian Robertson saying that the move is in keeping with AQN’s international expansion strategy. (All figures in US dollars unless where noted otherwise.)
”This incremental investment in Atlantica deepens our interest in an attractively-priced portfolio of high quality, international operating assets, one which is accretive to APUC’s earnings,” stated Robertson.
Algonquin’s share price has been on a nice run of late after it broke out of a mid-C$12.00 to mid-C$14.00 range that it had been inhabiting for more than a year. The stock finished on Friday down one per cent to C$14.90.
The upswing was helped by fourth quarter fiscal 2018 results reported on February 28, which featured a six per cent increase year-over-year in Adj. EBITDA to $196.9 million and a three per cent year-over-year growth in revenue to $419.9 million. For the year, AQN posted an impressive 17 per cent growth in Adj. EBITDA and an eight per cent growth in revenue. The stock’s dividend yield is currently at 4.60 per cent.