Three under-the-radar dividend payers are buying opportunities for their solid growth prospects. Innergex Renewable Energy (TSX: INE) has a sustainable business model, while Peyto Exploration & Development Corp. (TSX: PEY) boasts revenue security and protection. Dexterra Group (TSX: DXT) thrives amid a challenging environment.
Sustainable business model
Innergex is underperforming in 2023 and trades at a deep discount (-42.1% year to date). However, at $8.98 per share, prospective investors can partake in the juicy 8.02% dividend. The $1.8 billion independent renewable power producer’s vision is to build a better world with renewable energy.
This $1.8 billion utility firm owns a diversified portfolio of high-quality, long-lasting renewable energy assets (hydro, wind and solar). Innergex operates installations in Canada, Chile, France, and the United States. Today, there are 86 operating facilities and 12 projects under development.
“We remain efficient in both operating our facilities and growing our business,” said Michel Letellier, Innergex’s President and CEO. Management believes the sustainable business model and financially sound projects assure the continuous growth of Innergex. Market analysts’ 12-month average price target is $14.33 (+59.6%).
Revenue security and protection
Peyto is seldom a top-of-mind choice in the energy sector. The $2.3 billion company is a low-cost operator and Canada’s fifth-largest gas producer. Its net income has been on the rise in the last two years. In 2021, it reached $152.2 million compared to the $35.5 million net loss in 2020.
For 2022, the net income of $390.7 million represents a 156.6% year-over-year increase. As of writing, the mid-cap stock trades at $11.89 per share and pays a mouth-watering 11.1% dividend. Peyto’s dividend growth rate in three years is 213.7%. The best part is that the payout frequency is monthly, not quarterly.
According to management, Peyto offers revenue security and support for continued shareholders because of fixed-priced contracts and the commencement of its Cascade power plant in Q1 2024. The premium hubs in North America should likewise contribute to revenues.
Peyto celebrated 25 years in October 2023 and looks forward to increasing production by 45,000 barrels of oil equivalent per day in 2024. Management is awaiting the approval of the new capital budget for a low-risk development program.
While Peyto isn’t immune from commodity price and foreign exchange volatility, a portion of its future revenue has protection. The company actively hedges future production with financial and physical fixed-price contracts. Also, major facility projects and pipeline and plant optimization projects are planned for next year.
Thriving businesses
Dexterra, operating in the Specialty Business Services industry, continues to beat the market despite the elevated volatility. The $362 million company, through its three business segments, delivers quality solutions and provides facility management and operations. At $5.60 per share, investors are up 6.3% year to date and partake in the 6.25% dividend.
All the segments, from Integrated Facilities Management (IFM) and Modular Solutions to Workforce Accommodations, Forestry and Energy Services (WAFES), are thriving this year. In the first three quarters of 2023, total revenue and net earnings rose 18% to $846.7 million, while net earnings ballooned 310.7% year over year to $27 million.
Business growth in 2024
Innergex, Peyto, and Dexterra have competitive advantages and specific characteristics to enable business growth in 2024. Your choice depends on which sector you’re comfortable investing in.
