MENU

Northland Power Inc.: Industry Profit Leader With a High Dividend Yield

If you are looking for a quality company that boasts a tidy profit and pays a nice dividend, here is a stock for your consideration. Northland Power Inc.  (TSX:NPI) has a lot going for it.

Northland, established in 1987, is an independent power producer that develops, owns, and operates power projects in Canada and Europe. Let’s see how the stock is faring.

Northland by the numbers

In August, Northland reported adjusted Q2 earnings of $0.19 per share, which beat industry estimates of $0.14. This missed last year’s Q2 results by 5%, but the numbers look good overall. Net income grew by 0.61% year over year in the second quarter, among the strongest growth in the industry. Northland has a net profit margin of 29.40%, making it a leader in the industry. For comparison, peers TransAlta Renewables Inc. (TSX:RNW) has a profit margin of 26.58%, and Alterra Power Corp.  (TSX:AXY) has a negative profit margin of -8.17%. Northland’s trailing earnings per share is $1.22.

The stock’s return on equity is a healthy 32.33%.  Over the last three years, revenue growth has averaged 25.41% per year — better than the industry average of 12.93%. The only number of real concern I see is Northland’s debt-to-net-equity ratio of 8.38, which means the company has a lot more debt than equity. However, this isn’t unusual for the industry.

The stock is currently trading about midway between its 52-week low of $20.89 and its 52-week high of $25.04. Analysts are currently looking for the stock price to move up into the $26 range over the next 12 months. That puts the stock on an upward trajectory if they are right.

Now, let’s look at the quality dividend we talked about. The stock currently pays a monthly dividend of $0.09 per share for an annual payout rate of $1.08 per share. This gives Northland a dividend yield of 4.71%. The dividend rate has held steady over the past five years at $0.09. If you are an income investor, this is a reliable dividend for you.

Bottom line

Northland is steady company, and it’s producing good results. It’s an industry leader in both revenue and profit. The stock also has a high dividend yield, which should make it attractive for income investors. If you want to add power company to your Foolish portfolio, Northland Power Inc. is a solid contender.

5 stocks we like better than Northland Power Inc.

When investing Guru Iain Butler and his shrewd team of analysts have a stock tip, it can pay to listen. After all, the newsletter they began just three years ago, Stock Advisor Canada, is already beating the market by 9.6%. And their Canadian picks have literally doubled the market.

Iain and his team just revealed what they believe are the five best stocks for investors to buy right now… and Northland Power Inc. wasn’t one of them! That’s right – they think these five stocks are even better buys.

*returns as of 5/30/17

Fool contributor Susan Portelance has no position in any stocks mentioned.

 

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.