Get 3.7% yield from Innergex Renewable Energy

Thanks to its clean, renewable power and diverse mix of hydroelectric, wind and solar sources, this firm retains strong conceptual appeal for investors. Coupled with long-term contracts to provide stable cash flows, the company can continue building up its utility operations.

Revenue surged by 11.1% to $242.5 million, driven by increased hydro production in B.C. and Chile, wind business growth in Quebec, and solar facility acquisitions in Ontario.
Cash flow rose even faster by 58.7%, giving the firm plenty of room to support its payout as it looks to re-allocate capital for maximum future gains.

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INNERGEX RENEWABLE ENERGY (Toronto symbol INE; www.innergex.com) operates 41 hydroelectric plants, 35 wind farms, 9 solar fields, and two 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.

Dividend Stocks: Both revenue and cash flow rise to support the payout

In the three months ended March 31, 2024, Innergex’s revenue rose 11.1%, to $242.5 million from $218.3 million a year earlier. The increase was due to higher hydro production in B.C and Chile, higher production from the wind business in Quebec, the acquisition of solar power facilities in Ontario and higher prices for wind energy in Chile. Cash flow rose 58.7% in the latest quarter, to $83.7 million, or $0.41 a share, from $52.8 million, or $0.26.

For 2024, 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 allocation strategy. As a result, it cut the annual dividend by 50.0% to $0.36 a share, which still gives you a reasonable 3.7% yield.

The company’s shares now trade at a reasonable 12.8 times its projected 2024 free cash flow of $0.78 a share.

Recommendation in Canadian Wealth Advisor: Innergex Renewable Energy is a buy.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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