This green power stock has moved down in the past few months. That’s mainly because the likelihood of higher interest rates in the coming months has increased the appeal of fixed-income investments. However, its new projects should deliver more cash for dividends.

This is how this firm continues to build up its operations, add to its distributions, and remain one of our top utility picks. 

The stock trades at 17.4 times the company’s 2022 cash flow forecast.

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INNERGEX RENEWABLE ENERGY (Toronto symbol INE; www.innergex.com) operates 40 hydroelectric plants, 32 wind farms and seven solar power fields. They’re spread across Canada, the U.S., France and Chile.

In February 2020, Innergex formed an alliance with Hydro-Quebec to expand their renewable energy businesses. Hydro-Quebec also bought $661 million of Innergex stock for a 19.9% stake in the company.

In the quarter ended September 30, 2021, Innergex’s revenue rose 13.5%, to $184.6 million from $162.7 million a year earlier. Cash flow rose 14.5%, to $93.0 million from $81.2 million. That rise was mostly due to an increase in higher-profit hydroelectric generation. However, with more shares outstanding due to the Hydro-Quebec deal, cash flow per share increased 8.5%, to $0.51 from $0.47.

Still, the cash from Hydro-Quebec is helping Innergex expand: the two recently bought Curtis Palmer, a 60-megawatt run-of-river hydroelectric portfolio located in Corinth, New York. The purchase price was $387.5 million.

Dividend Stocks: Stable cash flows facilitate new projects

With its clean, renewable power, Innergex has strong conceptual appeal for investors. But just as important—especially considering the pandemic—is the company’s diverse mix of hydroelectric, wind and solar power. The addition of Curtis Palmer, along with Innergex’s existing long-term contracts, provides the company with stable cash flows. That lets this utility firm continue to build its operations and add to your distributions.

Innergex previously paid $88.4 million to acquire the remaining 50% interest in Energía Llaima SpA, a renewable energy company based in Chile, that it doesn’t already own.

Energía Llaima owns three hydro facilities in Chile with a capacity of 152 megawatts, a solar thermal facility with a capacity of 34 megawatts, as well as several projects in the development or prospective stages. It also manages operations at the Salvador solar farm on behalf of Innergex.

Innergex entered the Latin American market three years ago through its joint venture with Energía Llaima. It has now gained a solid understanding of that market, and is now ready to pursue growth of its own in Chile and Latin America, more broadly.

With the April 2020 payment, the company increased its quarterly dividend by 2.9%, to $0.18 a share from $0.175. The annual rate of $0.72 yields a high 4.2%. However, Innergex has decided to maintain the current rate to preserve cash for its growth plans.

The company’s shares trade at a reasonable 17.4 times its projected 2022 cash flow of $1.00 a share.

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