A Dividend Powerhouse I’d Buy Over Algonquin Power Stock Right Away

Algonquin power (TSX:AQN) looked like the perfect stock back in 2020, but with focus now on survival, it may be better to look elsewhere.

| More on:
The sun sets behind a power source

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) has been through a bit of a rollercoaster ride lately. Over the past year, the stock has taken a dip, down roughly 25%. This left some investors feeling a bit queasy. It’s currently trading around the $9 mark, a far cry from its highs of over $20 back in 2020. The company’s earnings have also been under pressure, with its recent quarterly results showing a decline in both revenue and net income compared to the previous year. It was not exactly the power surge investors were hoping for.

But it’s not all doom and gloom. Algonquin still offers a juicy dividend yield, currently hovering around 6%. This is sure to keep income-focused investors somewhat satisfied, but given recent market moves, it might not be enough, which is why investors may want to look elsewhere.

Why not AQN?

If you’re thinking about investing in Algonquin stock, you might want to hold off for now. The company has recently sold its renewable energy business to LS Power for US$2.5 billion. Now, this sounds like a solid deal on the surface. However, this move is part of a larger strategy to transform into a pure-play regulated utility, and the transition hasn’t been smooth sailing. The company has also slashed its dividend by 40%, which is a clear sign that financial pressures are mounting. While the idea of streamlining operations might pay off in the long run, the short-term outlook is anything but certain.

Created with Highcharts 11.4.3Algonquin Power & Utilities PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Adding to the concerns, Algonquin’s revenue has seen a 5% decline year over year, with the company also reducing capital expenditures to a bare minimum. This belt-tightening indicates that Algonquin is more focused on survival than growth right now. Plus, with ongoing rate case filings and the need to bolster its balance sheet, there’s a lot of uncertainty hanging over this stock. Unless you’re in it for the long haul and have a strong stomach for volatility, Algonquin Power might not be the best choice for your portfolio at the moment.

Consider BEP instead

When it comes to picking a strong renewable energy investment on the TSX, Brookfield Renewable Partners (TSX:BEP.UN) shines a bit brighter than most. In its recent earnings report, Brookfield showed a solid 9% bump in funds from operations (FFO) to $339 million, or $0.51 per unit. Proof that its diverse portfolio is working in its favour.

Created with Highcharts 11.4.3Brookfield Renewable Partners PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Despite reporting a net loss of $154 million, Brookfield continues to invest smartly, deploying $8.6 billion in capital to expand its market-leading reach. This kind of aggressive yet strategic growth is why its 6.02% dividend yield, backed by consistent quarterly distributions, remains a reliable choice for income-focused investors.

However, Brookfield’s strong financial health is complemented by some high-profile deals, like their recent partnership with Westinghouse and Cameco. These ventures not only diversify its income streams. It also positions it to benefit from the rising demand for both renewable and nuclear energy. With a $4.4 billion liquidity cushion and a commitment to growing shareholder value through stable and increasing dividends, Brookfield Renewable Partners is well-equipped to weather economic shifts while delivering consistent returns. For investors looking for a blend of growth and income, BEP.UN offers a more compelling option on the TSX.

Should you invest $1,000 in Atrium Mortgage Investment Corporation right now?

Before you buy stock in Atrium Mortgage Investment Corporation, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Atrium Mortgage Investment Corporation wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Amy Legate-Wolfe has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable Partners and Cameco. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Canadian Red maple leaves seamless wallpaper pattern
Dividend Stocks

5 Canadian Dividend Stocks to Buy and Hold for the Next 20 Years

These Canadian stocks have paid dividends for decades, making them reliable investments to generate regular passive income.

Read more »

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »