Stock trading activities this year are choppier compared to 2024. But despite the economic uncertainty caused by the U.S.-initiated tariff war, the TSX displays remarkable resilience. As of May 16, 2025, seven of the 11 primary sectors are in positive territory. The strong rally in the last 30 days indicates that investors’ confidence has returned, too.
There are plenty of buying opportunities, including cheap but outperforming dividend stocks. One name that’s hard to pass up on today is Algonquin Power & Utilities (TSX:AQN). This utility stock trades at $7.81 per share and is up +23.97% year to date.
AQN also advanced +15.29% in the last 90 days amid trade tensions. Moreover, at less than $10, it pays a juicy 4.59% dividend to income investors. Market analysts recommend a hold rating, and I don’t discount a rise to its 52-week high of $9.19 (+17.71%) soon.
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Pure-play utility
Algonquin Power & Utilities, a $6 billion diversified international utility company, provide rate-regulated natural gas, water, and electricity generation, transmission and distribution utility services in North America. Its main operating business, Liberty, also operates in Bermuda and Chile.
Management said Algonquin will continually demonstrate its “Think Global, Act Local” business model. The business strategy focuses on growth, operational excellence, and sustainability. As a growth-focused company, strategic acquisitions and organic initiatives are continuing.
In January 2025, Algonquin completed the sale of its non-regulated renewable energy business (wind and solar assets) as it transitions to a pure-play utility. The company will use the US$2.28 billion net proceeds to reduce existing debt and strengthen the balance sheet.
Only the hydroelectric generation facilities in Canada, under the Hydro Group, were retained in the renewable energy business. Algonquin’s transformation included a leadership change. On March 7, 2025, Rod West assumed the CEO post in place of Chris Huskilson. West sees a significant opportunity to advance Algonquin’s position as a pure-play regulated utility.
Financial turnaround
In the three months ending March 31, 2025, revenue increased 7% year over year to $692.4 million. Net earnings reached $95.4 million compared to the $56.8 million net loss in the first quarter (Q1) of 2024 (+268% turnaround). West said, “The company recorded a constructive first quarter of 2025 with notable year-over-year improvements in our key financial metrics … Our results were solid, reflecting the strength of our core regulated utility operations, even when accounting for one-time items that contributed positive tailwinds.”
The Regulated Services Group operates a portfolio of regulated electric, water distribution and wastewater systems, and natural gas utility systems and transmission operations. Its net earnings rose 43% to $134.6 million from a year ago.
Good entry point
Algonquin hasn’t delivered enormous capital gains in ten years. However, it has kept investors whole on quarterly dividend payments since Q1 2012. The focus on regulated utility operations is a welcome development because of the transition to a more stable and predictable business model. Investors’ reception is likewise positive, evidenced by the stock’s performance thus far in 2025.
Some market analysts say the transformation cut the utility firm’s risk profile. Furthermore, the long-term earnings should sustain a 60% to 70% payout ratio. No reservations, AQN’s current share price is a good entry point.
