Two compelling factors make this stock particularly attractive for income-focused investors. First, its operational improvements are accelerating—operating expenses as a percentage of revenue are expected to keep improving through focused efficiency initiatives, while the company plans to keep expanding in its core regulated utilities business.
Second, the dividend remains well-supported aftere the recent reduction to $0.065 per share quarterly. The lower payout ratio creates financial flexibility while the utility’s regulated revenue base provides stable cash flow coverage.
Meanwhile the stock trades at 18.5 times the company’s forward earnings forecast
ALGONQUIN POWER & UTILITIES CORP. (Toronto symbol AQN; www.algonquinpower.com) sold its 42.2% ownership stake in Atlantica Sustainable Infrastructure plc (Nasdaq symbol AY) in December 2024 for $1.08 billion (all figures in U.S. dollars).
Algonquin now focuses entirely on its regulated utilities, which supply electricity, gas, water distribution and wastewater collection services to 3.17 million customers in Canada, the U.S., Chile and Bermuda.
Algonquin also sold its non-regulated renewable energy business to LS Power in January 2025 for $2.1 billion after taxes and other expenses. It received $1.95 billion in January and will receive up to $415 million later in 2025.
Algonquin now focuses entirely on its regulated utilities, which supply electricity, gas, water distribution and wastewater collection services to 3.17 million customers in Canada, the U.S., Chile and Bermuda.
Utility emerges from transformation with stronger fundamentals
In the three months ended March 31, 2025, Algonquin’s revenue rose 7.1% to $692.4 million from $646.2 million a year earlier. That was due to higher power rates and favourable weather conditions.
Excluding one-time items, earnings in the quarter increased 39.3% to $111.6 million from $80.1 million. On a per-share basis, earnings increased at a slower rate of 27.3%, to $0.14 from $0.11, on more shares outstanding.
Due to its asset sales, Algonquin cut your quarterly dividend by 40.1% with the October 2024 payment. Investors now receive $0.065 a share instead of $0.1085. The annual rate of $0.26 nonetheless yields a solid 4.5%.
Moreover, the dividend payout ratio will represent a more sustainable 60% to 70% of annual earnings in the long term.
Algonquin expects to earn $0.31 U.S. a share in 2025, and the stock trades at 18.5 times
that forecast. Algonquin Power is still a buy.
Recommendation in Dividend Advisor: Algonquin Power & Utilities Corp. is a buy.
