Investing in dividend-paying stocks is a proven way to generate extra income with minimal effort. Canadians have several sound options across the TSX’s 11 primary sectors. However, if your primary objective is to receive cash every month, Northland Power (TSX: NPI) is a brilliant choice.
Besides the high 6.6% dividend yield, the payout frequency is monthly. Moreover, because of the rising energy demand, expect the power producer to deliver predictable revenue streams for years. At its current price of $18.28, 383 shares or a $7,001.24 investment transforms into $459.28 yearly ($38.27 monthly). Performance-wise, NPI is up 4.4%-plus year-to-date versus the broad market’s 1.2-plus%.
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Clean and green investment
Northland Power investors actively contribute to a more sustainable and environmentally friendly future. This $4.8 billion company produces electricity from renewable resources. Its operating generating capacity is 3.2 GW, with a significant construction pipeline through 2027 (2.4 GW).
Management’s vision is for Northland Power to become a top clean and green developer, constructor, owner, and operator of sustainable infrastructure assets. The diversified energy infrastructure assets include offshore wind, onshore renewables (wind and solar), and natural gas and utilities.
Northland Power operates in North America, Latin America, Europe, Asia, and other selected global jurisdictions. Each segment operates in growth markets where the collective development pipeline is 9.5 GW, excluding the 2.4 GW of projects under construction. As of year-end 2024, 90% of revenue is contracted, and the weighted average contracted revenue life is 15 years. Northland Power boasts an investment-grade balance sheet and a fully funded construction program.
According to its Board Chairman John Brace, the 2.4 GW of capacity in construction across three projects worth $16 billion is the largest execution phase in NPI’s history. The projects will generate an aggregate Adjusted EBITDA of $570 to 615 million and free cash flow (FCF) of $185 to $210 million for the business by 2027.
“As global markets and the industry react and settle into new macroeconomic and geopolitical dynamics, I am confident Northland’s proven track record and position as a trusted, experienced global energy provider will differentiate us as a partner of choice in any market,” said Brace.
Growth outlook
In the 12 months ending December 31, 2024, revenue from energy sales increased 5.1% year-over-year to $2.4 billion. Net income reached $371.4 million compared to the $96.1 million net loss in 2023. Christine Healy, an international energy transition executive, assumed the role of President and CEO effective January 2025.
“We have made excellent progress on our construction projects in Poland, Taiwan, and Canada. Some of these projects are expected to start contributing to Northland’s earnings in 2025, continuing through 2026, with full realization in 2027,” Healy said. “Our growth outlook for energy transition and demand for power is stronger than ever.
Stronger position
“Northland enters 2025 in a stronger position than ever before at an exciting time for the industry with global demand for energy growing,” Brace added. Given the globally diversified portfolio across multiple technologies and a long-term contract asset base, the future is bright for this renewable energy player. Market analysts recommend a buy rating for NPI. Their 12-month average price target is $27.11, a 48.3%-plus potential upside.
