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This Clean Energy Stock Just Made a Key Acquisition

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) announced on Monday that it would be purchasing a Bermuda-based utility provider. It will be spending US$365 million to acquire Ascendant Group, which owns Bermuda Electric Light.

Serving just 63,000 businesses and residents, the company is a small piece of a much bigger puzzle for Algonquin’s overall growth strategy. The company’s CEO Ian Robertson stated in the press release, “The acquisition of Bermuda Electric Light Company builds materially on our international growth program through the addition of this high-quality utility, an acquisition which will be immediately accretive to earnings.”

It’s not just the bottom line that Algonquin is concerned about, but it’s about helping the country become greener as well. Robertson went on to say, “In addition to Ascendant customer and employee benefits coming from the scale of our existing utility operations, we are confident that our demonstrated capability in renewable energy development can help Bermuda realize on its carbon reduction aspirations.”

It’s a noble cause for Algonquin and shows the company’s pursuit of trying to be greener and more environmentally friendly. Not only will the move help the company add to its sales and overall profits, but it will help it advance its social responsibility and green initiatives as well.

Opportunity for more acquisitions

Algonquin still has the potential for more growth via acquisition as with $140 million in free cash over the past 12 months, the company has been doing a good job of generating cash — a key ingredient when it comes to funding growth. And with lots of fragmentation in the industry, Algonquin could be a company to watch for, especially as it continues to look for other acquisitions.

So far, the company has been producing impressive results with Algonquin showing strong growth in both its top and bottom lines over the past few years. And with more acquisitions to help pad its growth, those numbers will be sure to rise in the future.

Why the stock is an attractive buy today

There are many reasons why Algonquin stock is an appealing buy. In addition to being a great clean energy stock to put into your portfolio, it’s also a decent value buy with the stock trading at around two times its book value. And if that weren’t enough of a reason to invest, then there’s also the company’s growing dividend, which, at around 4.3%, is a great above-average payout that can help add lots of recurring income for investors.

Given where the world is headed with concerns about climate change at the forefront, a stock like Algonquin is a great way to take advantage of a growing trend that’s only going to get stronger in the years to come. The acquisition announced this week proves the company’s commitment to being green, and that’s going to win over many investors, not just because of the strong numbers that will likely come from the expansion, but also due to the company’s desire to do some good.

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Fool contributor David Jagielski has no position in any of the stocks mentioned.

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