Algonquin Power & Utilities Offers a 4.3% Yield At a Reasonable Valuation

Algonquin’s core regulated utility engine is now clearly visible and growing, with improving earnings quality and reduced balance‑sheet risk. The company is less exposed to merchant renewables volatility and more focused on relatively stable, rate‑regulated revenues from electricity, gas and water utilities.

The valuation and yield also look appealing relative to the improved outlook and de‑risked profile. The stock trades at just 6.3 times the company’s forward cash flow forecast. For investors who previously avoided this firm due to leverage and renewables execution risk, the refocus, de‑leveraging and reset dividend has created a more straightforward, income‑oriented utility story that offers lots of upside.

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 also sold its non-regulated renewable energy business to LS Power in January 2025 for $2.1 billion.

The company 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.
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Algonquin’s new investment will fuel cash flow going forward

Thanks to power and gas rate increases, revenue in the three months ended December 31, 2025, rose 7.8%, to $630.7 million from $584.8 million a year earlier. Lower interest costs and expenses helped lift cash flow 30.0%, to $0.13 a share (or a total of $103 million) from $0.10 a share (or $79 million).

Algonquin now plans to spend $3.2 billion between 2026 and 2028 on upgrades to its regulated utilities. Those investments should lift the company’s 2026 cash flow by about 17% to $0.95 a share, and the stock trades at an attractive 6.3 times that forecast.

Due to 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 4.3%.

Recommendation in Dividend Advisor: Algonquin Power & Utilities Corp. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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