Algonquin Power & Utilities Corp (AQN)

DealRNothing wrote: ↑ I did know of the Chevron joint venture announcement and it did raise ??'s. Is a company that is actually working to "increase" carbon development truly meeting a renewable mandate? AQN will actually be working on-site energy needs for Chevron carbon extraction.

Chance7652 wrote: ↑
For evaluating AQN, I think it needs to be done in USD as that's what they report in. I look at Fastgraphs and current yeild vs average yield. EV/EBITDA could also probably be used but I haven't looked at that. I've been adding on dips and last bought at 16.92. I think its slightly overvalued but estimates look good for the next two years.

DealRNothing wrote: ↑ I run my own internal models based on company(s) fundamentals, financials/estimates. I've never relied on analyst estimates (especially for target prices) because they are notoriously wrong. I do analysis based on reporting currency & shareprice (and yes, know that AQN reports $USD). The utility/renewable sector IS overvalued on a historic/forward basis. The over-valuation is a combination of low IR's / Institutional investment. IMO, AQN has a very comparable profile to EMA/FTS and should trade more inline with their metrics. NPI is more of a true renewable along with BLX, INE, etc. That said, the sector is over-valued based on current guidance(s).

I suspect if Fall markets are "unkind", Tech/Nasdaq (worst to likely be hit), along with renewable utilities will be hardest hit (on valuations & YTD performances).

As a side note, AQN has committed to double-digit dividend growth (as ENB, too, lol) but the reality is for most companies, FCF (free cash flow) is not growing at the same pace. While retail investors may take the headline number, one needs to keep in mind the POR's (Payout Ratios). In most cases these ratios have gone up over the last few years as companies are simply not growing at the rate of their dividends. In other words, the ratio is not remaining constant. Basically, "more" cash is being paid out against FCF's.

One should not take "dividend growth" to necessarily mean "company growth" (Revenues, FCF, Earnings, etc).

DealRNothing wrote: ↑
As a side note, AQN has committed to double-digit dividend growth (as ENB, too, lol).

treva84 wrote: ↑ Just as an aside, ENB is telegraphing 5-7% div growth moving forward.

DealRNothing wrote: ↑ Yes... forward dividend growth guidance is becoming more muted (I own ENB, too)...I think most saw the last 3 years as unrealistic div increases. Given the expected IR's going forward, most utilities should target more like 3%>5% (more inline with slower Cashflow/revenue growth / inflation). Additionally, divcos at these yields do not have to (for now) compete with a sub 1% yield Bond market. Doesn't make sense to over extend the payout ratios in this environment.

Chance7652 wrote: ↑ I think being more on the conservative side with dividend raises could be good idea as well. I'm a bit more optimistic though and think AQN dividend increases will end up in the 5-8% range after they get to their 85% payout in 2022 . Just to point out, I'm a bit biased on AQN as its done really well for me and I've been buying it on the way up to the point of where its my 3rd largest holding.

For AQN their results are not great this year but I view that mostly as due to Covid and the additional shares that they issued. The new issue was a way to them to ensure equity funding for a while shares were at a decent price.

Dumb question but what is IR? I was thinking this has something to do with rate cases but probably I probably shouldn't assume...

The quarterly dividends payable on common shares are declared in U.S. dollars. Beneficial shareholders (those who hold common shares through a financial intermediary) who are resident in Canada or the United States may request to receive their dividends in either U.S. dollars or the Canadian dollar equivalent by contacting the financial intermediary with whom the common shares are held. Unless the Canadian dollar equivalent is requested, shareholders will receive dividends in U.S. dollars, which, as is often the case, the financial intermediary may convert to Canadian dollars.

The Canadian dollar equivalent of the quarterly dividend is based on the Bank of Canada daily average exchange rate on the day before the declaration date.

hwyc2007 wrote: ↑ Although AQN pay dividends in USD, I learned today that shareholder can elect to be paid in CAD equivalent.

➡ http://investors.algonquinpower.com/fil ... =404972727 ⬅

Looks like TDDI has been converting my USD dividends into CAD in the background all this time because I did not get the C$0.2056 per share for today's payout.

In a research report previewing third-quarter earnings for renewable power producers titled A Difficult Choice: Sector Momentum or Attractive Value?, Raymond James analyst David Quezada advises investors to maintain exposure in the sector despite a recent jump in prices, noting “uncertainty remains regarding the degree multiples could continue to expand among these topical names.”

Following this rally benefitting from an ESG tailwind, Mr. Quezada did say “remaining opportunities are limited.”

“However, we do see a handful of instances where stocks with a rising proportion of renewable generation and/or attractive sustainability attributes, have not yet enjoyed a corresponding valuation lift," the analyst said. "Specifically, we highlight two names which, while not strictly renewable power, have a strong runway from an ESG perspective with significant room to reduce GHG emissions. These include Strong Buy rated Algonquin (where generation from gas is expected to decline to 25 per cent by 2023 from 45 per cent currently) and Outperform rated Capital Power which is not only increasing its renewable exposure (from 20 per cent to 30 per cent by 2023 as per our estimates), but also transitioning away from coal. Outside of the IPPs, we also continue to highlight Xebec Adsorption as a top pick with ESG friendly attributes and robust growth.”

Mr. Quezada made a series of target price changes to stocks in his coverage universe. They are:

Algonquin Power & Utilities Corp. (AQN -0.06%decrease
/AQN-T -0.29%decrease
, “strong buy”) to US$18.50 from US$18. The average on the Street is US$15.75.

Chance7652 wrote: ↑ Not big news but thought I would post. AQN was upgraded by Raymond James today.

This is a different topic but interesting to read that CPX will be at 30% renewables by 2023. I own that name as well and its trading at a much lower multiple than the other IPPs.

Here is a portion of this G&M article:

https://www.theglobeandmail.com/investi ... rades-131/

MrMom wrote: ↑ Because I was pig headed, I just never owned AQN.TO. Rectified that this morning at $20.87.

Capt. wrote: ↑ I struggle with AQN too. 5x trailing price to sales still seems high to me for a utility. Granted the revenue growth was huge from 2016 to 2017, but it has flatlined since. Is it the renewable energy play that convinced you to buy it?

jflex wrote: ↑ Journal your Algonquin shares to the USD side of the account, and you will receive your dividends in the proper USD amount without any conversion (at TDDI's dodgy rates).

I do this for all my Canadian stocks that pay their dividends in USD (Brookfield, Magna etc).

luking wrote: ↑ Can you please explain what does this "cost"? Journal or exchange fee?

jflex wrote: ↑ Journal your Algonquin shares to the USD side of the account, and you will receive your dividends in the proper USD amount without any conversion (at TDDI's dodgy rates).

I do this for all my Canadian stocks that pay their dividends in USD (Brookfield, Magna etc).