When the market pushes a solid company down, it can create an opening for long-term investors. That’s the case right now with Algonquin Power & Utilities (TSX:AQN). This utility stock has taken a hit, falling about 22% from its recent highs. But underneath the surface, the dividend stock continues to generate stable revenue and has started to turn a corner. For investors who like dependable income and long-term potential, this dip looks like a rare opportunity.
About AQN
Algonquin runs a mix of regulated utilities and renewable energy assets across North America. It serves over one million customers with electric, water, and natural gas utilities. It also has a hydroelectric business that is benefiting from favourable market dynamics. In recent months, the dividend stock made a strategic decision to sell off its wind and solar assets for over US$2 billion. That move was meant to streamline the business and focus more on its regulated operations, which provide predictable cash flow.
In its most recent earnings report for the first quarter of 2025, Algonquin posted strong results. Net earnings came in at US$95.4 million, a sharp improvement from a loss of US$56.8 million in the same quarter last year. Adjusted net earnings were US$111.6 million, up 39% year over year. The dividend stock also reported earnings per share of US$0.14, with an increase of 27% compared to last year. This shows that the company’s shift to focus on utilities and hydro is already paying off.
The regulated services segment reported a 43% increase in net earnings to US$134.6 million. Meanwhile, the hydroelectric group delivered a 536% surge in profit, hitting US$15.9 million. That massive jump reflects better water flows and higher energy prices, making it one of the brightest spots in Algonquin’s operations. While total revenue fell slightly to US$692.4 million, that was mostly due to the wind and solar asset sales. The core business is not just intact; it’s performing well.
A safe dividend
What’s also worth noting is the company’s progress on debt. It used proceeds from the asset sales to start paying down its balance sheet, which has been a concern for investors over the past year. That effort is already helping reduce interest expenses and improve financial flexibility. Algonquin also had successful rate cases in Missouri, Arkansas, and New Hampshire, leading to an additional US$22.3 million in expected annual revenue.
The dividend stock is trading around $8 as of writing, down significantly from levels seen last year. But it has still gained over 22% year to date. That tells us the turnaround is being recognized, but there’s still a gap between its recent performance and long-term potential. For those buying at today’s prices, there may be further upside ahead.
One challenge has been the dividend. Algonquin reduced its payout in 2023 to support its shift in strategy and manage debt more effectively. As a result, the dividend yield is now around 4.6%. That’s lower than in previous years but still generous for a utility with this kind of growth potential. And if earnings continue to improve, there’s room for that dividend to grow again. And right now, a $5,000 investment could still bring in each year.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (annual) | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| AQN | $7.91 | 632 | $0.36 | $227.52 | Quarterly | $4,998.32 |
Bottom line
Every investment comes with some risk. For Algonquin, that includes regulatory setbacks, economic slowdowns, or delays in monetizing tax credits related to its asset sales. But overall, the direction looks positive. The business is cleaner, the balance sheet is healthier, and the focus is tighter.
So when a utility stock with strong earnings, a solid customer base, and improving financials drops 22%, it’s worth paying attention. Algonquin Power & Utilities may not be making headlines, but it’s doing the kind of quiet, steady work that long-term investors love. If you’ve been waiting to buy the dip, this could be your moment.
