High yields backed by long-term contracts

Article Excerpt

ALGONQUIN POWER & UTILITIES CORP. $9.58 (Toronto symbol AQN; Shares outstanding: 238.9 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.9%; www.algonquinpower.com) has nearly tripled in size over the past three years through acquisitions. It plans to expand further with 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. In addition, its hydroelectric, thermal energy, solar and wind facilities generate 1,150 megawatts, up from 460. Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 21.0% of Algonquin. Algonquin’s revenue rose 11.3% in the three months ended March 31, 2015, to $381.9 million from $343.0 million a year earlier. Cash flow per share gained 5.1%, to $0.41 from $0.39. The first quarter is typically the company’s strongest, due to higher winds, rainfall and energy demand. Growth by acquisition—particularly rapid growth—adds risk. But Algonquin cuts that risk…

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