RRSP Investors: Here’s a Renewable Energy Company Taking on the World

Northland Power Inc. (TSX:NPI) is setting up for a strong 2020 and beyond, with new projects and acquisitions set to boost revenue and cash flow, driving strong returns for your RRSP.

| More on:
Clean energy

Image source: Getty Images

Renewable energy. It is on everyone’s hearts and minds. It is the way of the future and it is Northland Power Inc.’s (TSX:NPI) everyday and everything.

Northland Power owns and operates renewable facilities that generate 2,014 megawatts of electricity, with an additional 399 megawatts of capacity under construction and 1,044 megawatts in advanced development.

RRSP investors looking for long-term gains, income, and stability, look no further. Northland offers of that and more. With a geographically diverse portfolio of revenue producing thermal, wind, and solar facilities, Northland facilities span the globe, from Canada to Europe, and now with the acquisition of EBSA in Columbia, Latin America.

Northland’s dividend yield of 4.74%, its cash flows easily cover dividend payments, and the company has just added growth and stability to its business. RRSP investors, you should seriously consider this stock in order to help fulfill your goals of retirement, income, and wealth creation.

Columbia’s value proposition

As an independent power producer dedicated to developing, building, owning and operating facilities in Canada and internationally, Northland has done well for its shareholders. The company has grown its business, while at the same time improving its cash flow and profitability.

With the acquisition of EBSA, the sole electricity distribution company in the region of Boyaca, Columbia, Northland has strategically added exposure to Latin America and this will serve as a springboard for further expansion in the region.

The acquisition also gave Northland its first ever exposure to the regulated distribution space. In 2020, management expects EBSA to contribute $100 million in EBITDA, representing approximately 8% of the company’s total EBITDA.

Columbia is a member of the OECD with an investment grade rating. The latest GDP number shows a 3% growth rate with inflation in the mid-single digits. The region has been active in the renewables space, with strong solar resources and a government that is active on the renewables front.

Management expects mid-single digit accretion to cash flow per share until the end of the current regulatory period ending 2023. Accordingly, we should expect to see Northland get a nice boost to its revenue and cash flow numbers in 2020, driving up profitability and driving down debt and debt ratios to more attractive levels.

Recall that the shares have been held back partly due to the company’s high debt levels, so this should serve to boost the stock price and get some new investors who were scared off by that into the stock.

More growth plus more stability

Beyond this acquisition, which gives Northland greater predictability and stability due to the fact that it’s a regulated revenue stream, Northland has also been building a solar facility in Mexico. And we can safely assume that Northland will leverage its position in Columbia with EBSA to pursue additional generation opportunities in Latin America.

Additionally, Northland’s DeBu offshore wind development in Germany is progressing well; it’s on time and within the budget. Completion is scheduled for the end of 2019, adding to 2020 revenue and cash flow.

Foolish bottom line

Northland stock is setting up for a very strong 2020 and beyond, with its growth plans in Latin America and the addition of regulated assets with healthy returns.

With Northland stock, RRSP investors get very generous dividend income, and accelerating revenue and cash flows as we head into 2020 and beyond. Northland is a stock of the future. Set yourself up now and enjoy the ride.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karen Thomas owns shares of NORTHLAND POWER INC.

More on Investing