After a painful +40% drop since 2022, Northland Power (TSX:NPI) has found itself in a precarious but potentially promising position. With interest rates easing from a high of 5.0% down to 2.75% in Canada, dividend investors and clean energy enthusiasts alike are asking: is it finally time to buy?
Let’s dig into Northland’s business, growth outlook, and risk profile to determine whether it deserves a place in your portfolio — or if it’s best left alone.
A renewable powerhouse with global reach
Northland Power, headquartered in Toronto, has been operating since 1987 and is now a global force in sustainable energy. Its portfolio includes the following:
- Offshore wind: 1.2 gigawatts (GW) of operating assets, a sector where it’s a leader in Europe and Asia.
- Onshore wind/solar: 1.3 GW.
- Natural gas: 0.7 GW.
- Battery energy storage: 0.3 GW.
The company owns or has economic interests in 3.4 GW of operating capacity and 2.2 GW under construction. Beyond that, it has a development pipeline of about 10 GW in early- to mid-stage opportunities — positioning it for long-term growth in global renewables.
Importantly, Northland’s revenues are highly contracted, with more than 90% secured through long-term power purchase agreements (PPAs) averaging 15 years in duration. This helps stabilize cash flows in an otherwise volatile sector.
Recent wins and what’s coming next
Last month, Northland Power scored a significant win by placing its Oneida Energy Storage Project into commercial operation. At 250 megawatts (MW)/1,000 megawatt-hour (MWh), Oneida is Canada’s largest operating battery energy storage facility — and it was delivered ahead of schedule and under budget. Investors rewarded this execution with a 9% stock bump since the announcement.
Looking forward, two major offshore wind projects are under construction:
- Hai Long (Taiwan): 1,022 MW capacity (Northland owns 30.6%), targeted for completion in 2027.
- Baltic Power (Poland): 1,140 MW capacity (Northland owns 49%), expected online in the latter half of 2026.
Both projects are backed by long-term contracts and represent key drivers of future cash flow. If delivered smoothly, they could help re-rate the stock substantially.
A risky dividend giant — but worth the wait?
At $20.77 per share, Northland Power offers a hefty 5.8% dividend yield, paid out as monthly dividends. Impressively, it has maintained or raised its dividend since 2013. These trailing-12-month metrics suggest the payout remains sustainable: 78% of net income but just 18% of operating cash flow and 26% of free cash flow.
Northland also sports an investment-grade credit rating (BBB) from S&P, giving it financial flexibility for ongoing development.
Still, this isn’t your typical defensive utility stock. Growth is lumpy, project execution risk is real, and returns are often delayed until new assets come online. But if Northland delivers on Hai Long and Baltic Power, cash flow could surge — potentially lifting the share price meaningfully.
Analysts seem optimistic. The consensus price target implies a 23% discount to fair value, pointing to nearly 30% upside over the next 12 months.
The Foolish investor takeaway: Buy, sell, or hold?
If you’re looking for a rock-solid, low-volatility utility, Northland Power would not be your first choice. But for investors with a long-term horizon and appetite for higher risk, it offers an attractive mix of high yield, global clean energy exposure, and project-driven upside.
Right now, Northland Power is a “Buy” or “Hold” for high-risk, patient investors willing to wait for its next phase of growth — with dividends softening the ride.
