This week we took the opportunity to buy the dip in Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN). The company reports in USD and pays a USD dividend. So, we’re going to discuss the dividend stock on the NYSE and in USD.
The latest dip was triggered by an equity offering of US$1 billion. The reference price for the equity units is $15.00 per common share.
AQN stock Business Overview
Algonquin consists of two business segments: regulated utilities (natural gas, electric, and water) and non-regulated renewable energy (wind, solar, hydro, and thermal). Its renewable energy portfolio primarily consists of long-term contracts that have inflation escalations. Together, its portfolio allows it to generate stable earnings and cash flow.
Buy the Dip in Renewable Energy Stocks
Year to date, the stock has pulled back along with other renewable utility stocks. Investors can also consider Brookfield Renewable Partners L.P. (TSX:BEP.UN)(NYSE:BEP) and Northland Power (TSX:NPI). However, Algonquin provides the biggest yield of the three. It has also been a little more resilient, likely due to its exposure to regulated utilities that make up about two-thirds of its business.
A couple of weeks ago, I wrote that “as the U.S. dollar has weakened against the Canadian dollar, it could be an opportune time for Canadians to buy U.S. stocks and for Americans to stick with U.S. stocks instead of buying Canadian stocks.”
Since then, as shown in the chart below, the USD has recovered slightly.
Notably, the USD is still a way off from its five-year midpoint of approximately C$1.30. Moreover, the WTI oil price is at a high point of +US$71 per barrel, which could weaken from there. Therefore, Canadian and U.S. investors alike are probably better off continuing to invest new money in U.S. stocks trading at good valuations.
Much like two weeks ago, I still find value in Bristol-Myers Squibb (NYSE:BMY). Merck (NYSE:MRK) that’s in the same space is also similarly undervalued. The dividend stocks offer decent yields of about 3%.
Making money from the stock market requires buying and selling stocks. The idea is to profit from capital gains when you sell stocks for higher prices than you paid them for.
When you build a dividend stock portfolio, you can potentially reduce tremendous amounts of work by focusing only on the buying. If you want to create a durable dividend stock portfolio with less work, here are three tips for you!
Dividend stock selection
You want to select dividend stocks with durably growing dividends for your buy-and-hold dividend portfolio. Here are some examples.