With clean, renewable power, Innergex Renewable Energy has strong conceptual appeal for investors. But just as important is its mix of hydroelectric, wind and solar power. That diversity, along with plenty of long-term contracts, provides stable cash flows. It also lets this utility firm continue to spur growth by building its operations.
While the firm recently cut its dividends, we feel that it was the right move to free up cash for investments in new projects.
With its shares down significantly from all-time highs reached in early 2021, the current valuation presents an attractive entry point for long-term investors.
INNERGEX RENEWABLE ENERGY (Toronto symbol INE; www.innergex.com) operates 42 hydroelectric plants, 35 wind farms, 9 solar fields, and three battery energy storage facilities, in Canada, the U.S., Chile and France.
In 2020, Innergex formed an alliance with Hydro-Quebec to expand their renewable energy businesses. At the same time, Hydro-Quebec bought $661 million of Innergex stock. It now owns a 19.9% stake in the company.
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Dividend Stocks: Innergex’s diversified portfolio delivers cash flow despite production issues
For the three months ended September 30, 2024, Innergex’s revenue fell 11.5%, to $258.6 million from $292.2 million a year earlier. Revenue decreased due to lower production at its Quebec and Chile hydro facilities, partly offset by higher production at hydro facilities in B.C., and higher prices at its wind and hydro facilities in Chile
The company earned $6.8 million, or $0.03 a share, in the latest quarter. That’s down 11.4% from $7.7 million, or $0.04.
For 2024, Innergex reduced its dividend payout to between 30% and 50% of its free cash flow (operating cash flow less maintenance capital expenditures) to provide maximum financial flexibility for its capital projects.
As a result, the company cut the annual dividend by 50.0% to $0.36 a share, which still gives you a high 4.6% yield.
Recommendation in Canadian Wealth Advisor: Innergex Renewable Energy is a buy.
