ALGONQUIN POWER & UTILITIES CORP. $9.38 - Toronto symbol AQN

ALGONQUIN POWER & UTILITIES CORP. $9.38 (Toronto symbol AQN; Shares outstanding: 239.5 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.3%; www.algonquinpower.com) has used acquisitions to nearly triple in size over the past three years and is planning more purchases.

The company’s regulated utility businesses now provide water, electricity and natural gas to over 489,000 customers, up sharply from 120,000 three years ago. Its hydroelectric, thermal energy, solar and wind facilities now generate 1,050 megawatts, up from 460.

Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 20.9% of Algonquin.

In the three months ended June 30, 2015, Algonquin’s revenue rose 4.0%, to $196.2 million from $188.6 million a year earlier. Cash flow per share gained 29.4%, to $0.22 from $0.17.

Growth by acquisition—particularly rapid growth—adds risk. But Algonquin cuts that risk by buying profitable utilities. It also ensures its renewable energy projects sell their power under long-term government-guaranteed contracts.

The stock trades at 10.4 times the company’s forecast 2015 cash flow of $0.90 a share. It raised its quarterly dividend by 10.0% with the July 2015 payment, to $0.09625 U.S. from $0.0875. The shares yield 5.3%, based on the new rate.

Algonquin Power & Utilities is still a buy.

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