Algonquin Power & Utilities Corporation Offers 4.6% Dividend Yield (AQN)
By: Ned Piplovic,
The Algonquin Power & Utilities Corporation (NYSE:AQN) has been distributing rising dividends to its shareholders every year for nearly a decade, and its current dividend distribution yields 4.6%.
The company has averaged double-digit-percentage annual dividend growth since it started distributing dividends in 2009. In addition to the robust dividend income, the company also offered its shareholders a double-digit percentage share price rise over the past year. the combined total return on shareholder investment over the past 12 months exceeded 15%.
The company’s next ex-dividend is set for March 28, 2018, and the pay date follows just a little more than two weeks later, on April 16, 2018.
Algonquin Power & Utilities Corporation (NYSE:AQN)
Headquartered in Oakville, Canada, and founded in 1996, the Algonquin Power & Utilities Corporation engages in the generation, transmission and distribution of utility assets in North America through its two operating subsidiaries — Liberty Power and Liberty Utilities. The company generates and sells electrical energy. It also owns or has interests in hydroelectric, thermal energy, solar energy and wind powered generating facilities. Additionally, the company owns and operates a portfolio of regulated electricity, natural gas, water distribution, and wastewater collection utility systems. Through its multiple segments, AQN serves almost 800,000 customers spread across 14 U.S. states.
The company’s current $0.1165 quarterly distribution equates to a $0.466 annualized dividend and yields 4.6%. Despite being diminished by the rising share price, Algonquin Power & Utilities’ current yield is only slightly lower than the company’s own 4.7%. However, the company’s current yield is more than double the 2% average yield of all the companies in the Services sector and more than 180% above the 1.56% simple average of AQN’s peers in the Diversified Utilities market segment.
The annualized dividend for 2018 is 133% higher than the total annual dividend paid in 2010, which was the first full year of dividend distributions for the Algonquin Power & Utilities Corporation. The company achieved this level of total annual dividend enhancement by growing its annual payout at an average rate of 11.2% per year since 2010.
The company’s share price experienced a strong uptrend in late 2016 and early 2017, which continued through the first 90 days of the trailing 12 months. Therefore, the current trailing 12-month period started from the share price’s 52-week low of $9.21 on March 10, 2017, and rose 16.7% to $10.75 by the end of June. After June 2017, the share price experienced some volatility but still ascended another 5% for total gain of 22.5% before reaching its new all-time high of $11.28 on November 24, 2017.
After peaking at the end of November, the share price reversed its uptrend into a slow decline over the next two months and then lost 10% during February 2018. However, the share price regained 27.5% of its total February losses in just the first full week of trading in March 2018. The share price closed on March 9, 2018, at $10.17, which was 10.4% higher than its 52-week low from one year earlier.
The company’s rising dividend income with an above-average yield and a double-digit-percentage asset appreciation combined to reward the Algonquin Power & Utilities Corporation’s shareholders with a 15.5% total return on investment over the past 12 months. Because the share price experienced a brief dip three years ago, the 60% total return over the last five years is only slightly higher than the 53% total return over the last three years.
Most stocks in the Utilities sector stocks have been declining since the beginning of 2018 on investor fears of rising interest rates. Utility stocks have been a haven for safe investing while interest rates were very low. However, rising interest rates make fixed-income investments more attractive to investors than utility stocks, because investors can earn similar returns with significantly lower risk exposure. However, investors that are still looking for utility stocks should make the Algonquin Power & Utilities Corporation one of their considerations.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.