The S&P/TSX Composite Index was down 78 points in mid-morning trading to open the week on Monday, August 14. Some of the worst-performing sectors included base metals, energy, and telecoms. Today, I want to discuss why I’m targeting one dividend giant over Suncor Energy (TSX: SU), one of the top energy stocks on the TSX. Let’s jump in.
Why I’m looking beyond Suncor stock today
Shares of Suncor were down 0.81% in mid-morning trading at the time of this writing. This top energy stock is still up 10% month over month. That has pushed its shares into positive territory in the year-to-date period. Investors can see more of its recent performance with the interactive price chart below.
This company is set to release its second batch of fiscal 2023 earnings after markets close today. I like Suncor’s value and solid dividend ahead of its earnings release, but I’ve got my eyes on another dividend giant as we approach the midway point in August.
How has this dividend giant performed over the past year?
Algonquin Power & Utilities (TSX: AQN) is an Oakville-based renewable energy and utility company that provides energy and water solutions and services in North America and around the world. Shares of this dividend giant have dropped 7.6% month over month as of mid-morning trading on August 14. The dividend stock is still up 8% so far in 2023.
Should investors be happy with Algonquin’s recent earnings?
Canadian investors should still be eager to get in on the renewable energy space in 2023 and beyond. Allied Market Research recently valued the global renewable energy market at US$881 billion in 2020. In the same report, the market researcher projected that the industry would reach a valuation of US$1.97 trillion by 2030. That would represent a compound annual growth rate (CAGR) of 8.4% from 2021 through to the end of the forecast period.
That said, Algonquin recently conducted a review and concluded that it was in the company’s interest to sell off its renewable assets and double-down on its status as a regulated utility. Its valuable renewable assets should draw interest in the quarters ahead.
The company released its second-quarter (Q2) fiscal 2023 earnings on August 10. It reported total revenue of $627 million — up 1% compared to the previous year. Meanwhile, adjusted net earnings plunged 49% year over year to $56.2 million, and adjusted net earnings per share (EPS) plunged 50% to $0.08.
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. This measure aims to give a clearer picture of a company’s profitability. In Q2, Algonquin delivered adjusted EBITDA of $277 million — down 4% compared to the previous year. Adjusted EBITDA for the first half of fiscal 2023 was largely flat at $619 million. Total revenue also posted 4% growth in the first half of the fiscal year to $1.40 billion.
Here’s why I’m buying this dividend giant right now!
Shares of this dividend giant are trading in favourable value territory compared to its industry peers at the time of this writing. Moreover, Algonquin offers a quarterly dividend of $0.108 per share. That represents a very strong 5.8% yield. I’m looking to buy the dip in this dividend stock over Suncor right now.
