TFSA and RRSP Investors: Own a Diversified Portfolio of High-Quality Utility Assets

Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN) owns and operates a diversified portfolio of regulated and non-regulated utility assets, which are expected to deliver predictable earnings and cash flows.

| More on:
Electricity high voltage pole and sky

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) owns and operates a diversified portfolio of regulated and non-regulated generation, distribution, and transmission utility assets which are expected to deliver predictable earnings and cash flows. Algonquin Power (AQN) seeks to maximize total shareholder value through real per-share growth in earnings and cash flows to support a growing dividend and share price appreciation.

Prudent financial objectives

One of AQN’s financial objectives is to maintain a BBB flat investment grade credit rating. To realize that objective, AQN monitors and strives to adhere to various targets communicated by rating agencies related to assessments of financial and business risk at AQN. These targets currently include expectations that AQN satisfies specific leverage targets and continues to generate no less than approximately the company’s current portion of earnings before interest, taxes, depreciation, and amortization (EBITDA), as determined by applicable rating agency methodologies.

In pursuing a growth strategy, AQN evaluates investment opportunities across two primary business units. These consist of the regulated services group, which primarily owns and operates a portfolio of regulated assets in the United States, Canada, Chile, and Bermuda, and the renewable energy group, which primarily owns and operates a diversified portfolio of renewable generation assets. The company also undertakes development activities for both business units, working with a global reach to identify, develop, acquire, or invest in renewable power-generating facilities, regulated utilities, and other complementary infrastructure projects.

Diversified portfolio

The regulated services group operates a diversified portfolio of regulated utility systems serving approximately one million customer connections. The group seeks to provide safe, high-quality, and reliable services to the company’s customers and to deliver stable and predictable earnings to the company.

In addition to encouraging and supporting organic growth within the company’s service territories, the regulated services group seeks to deliver continued growth in earnings through accretive acquisitions of additional utility systems.

Continuing growth

The renewable energy group generates and sells electrical energy produced by a diverse portfolio of renewable power generation and clean power-generation facilities primarily located across the United States and Canada. The group seeks to deliver continuing growth through development of new greenfield power-generation projects and accretive acquisitions of additional electric energy generation facilities. In addition to directly owned and operated assets, the renewable energy group has investments in generating assets with approximately 1.1 gigawatt (GW) of net generating capacity.

Lucrative pipeline assets

AQN’s renewable energy group also works to identify, develop, and construct new greenfield power-generating facilities and transmission lines, as well as to identify and acquire existing projects, in various stages of development and construction, that would be complementary and accretive to the group’s existing portfolio.

Further, the group’s $3.1 billion development pipeline from 2021 through the end of 2025 consists of anticipated investments in renewable generation projects and facilities. The projects identified are at various stages of development and construction and have advanced to a stage where the resolutions to major project uncertainties are probable but not certain, and where it is expected that the project will meet management’s risk-adjusted return expectations.

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 Nikhil Kumar has no position in any of the stocks mentioned. 

More on Investing

Hands holding trophy cup on sky background
Investing

3 Growth Stocks That Could Be Huge Winners in the Next Decade and Beyond

Here are three top TSX growth stocks that may be worth a look, given the significant valuation declines these stocks…

Read more »

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Man data analyze
Stocks for Beginners

Beginners: 2 Market-Beating Stocks Just Getting Started

Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) and Constellation Software (TSX:CSU) are proven market beaters that could continue their ways.

Read more »

oil and natural gas
Energy Stocks

Small OPEC+ Oil-Output Hike: Buy More Energy Stocks?

Energy stocks could soar higher, because oil markets will remain tight due to the small production increase by OPEC+.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

edit Person using calculator next to charts and graphs
Investing

Where to Invest $500 in the TSX Right Now

Long-term investors can look to buy stocks, including Suncor Energy and Shopify, as they are poised to outpace the broader…

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

falling red arrow and lifting
Investing

2 Oversold TSX Stocks That Should Bounce Back

Stocks that are oversold without an external catalyst like a market crash or a weak sector might be risky buys,…

Read more »