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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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.
Thanks, Mike. Please look to our coming IC Q&As for more on this topic. For now we believe Successful Investors continue to benefit from the guidance of our TSI 3-Part investment approach: Invest mainly in well-established, dividend-paying companies. (Ideally, some of your picks should have hidden assets—that is, assets that many investors disregard or fail to appreciate.); Spread your money out across most if not all of the five main economic sectors–Manufacturing & Industry, Resources & Commodities, the Consumer sector, Finance and Utilities; downplay or avoid stocks in the broker/media limelight, where a modest business setback can set off a deep, sudden and sometimes permanent drop in the stock.
Never a good sign when a company cuts their dividend in half. Plus, the stock has been going down for 4 years and is now 1/5 of what it was back in Feb. 2020. I’d want to see some signs that the stock has stabilized. What is the use of a dividend if the capital is lost?
Hi, Shiv. Thanks for your comment. Innergex stock is down in the past year, mainly because the company 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. However, these new assets, along with long-term contacts to sell their power at fixed rates, improve the sustainability of the current dividend, which yields a high 4.6%. Its alliance with Hydro-Quebec also cuts its risk. Hope that helps.
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Any chance of giving a list of stocks least likely to be affected by the possible tariffs from USA
Thanks, Mike. Please look to our coming IC Q&As for more on this topic. For now we believe Successful Investors continue to benefit from the guidance of our TSI 3-Part investment approach: Invest mainly in well-established, dividend-paying companies. (Ideally, some of your picks should have hidden assets—that is, assets that many investors disregard or fail to appreciate.); Spread your money out across most if not all of the five main economic sectors–Manufacturing & Industry, Resources & Commodities, the Consumer sector, Finance and Utilities; downplay or avoid stocks in the broker/media limelight, where a modest business setback can set off a deep, sudden and sometimes permanent drop in the stock.
Never a good sign when a company cuts their dividend in half. Plus, the stock has been going down for 4 years and is now 1/5 of what it was back in Feb. 2020. I’d want to see some signs that the stock has stabilized. What is the use of a dividend if the capital is lost?
Hi, Shiv. Thanks for your comment. Innergex stock is down in the past year, mainly because the company 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. However, these new assets, along with long-term contacts to sell their power at fixed rates, improve the sustainability of the current dividend, which yields a high 4.6%. Its alliance with Hydro-Quebec also cuts its risk. Hope that helps.