Most readers already know that Algonquin Power and Utilities Corp. (TSX:AQN)(NYSE:AQN) is among my top picks for income-oriented investors with a relatively long-term investment time horizon. In this article, I’m going to discuss yet another reason I prefer this stock relative to its peers and why I think shares are still a steal at these current levels.
A couple of months ago, Algonquin completed a financing round of $900 million, a move which did not result in much, if any reaction, at all. Typically, financings like these tend to be negative for companies due to the dilutive nature of equity offerings, as well as the signal that gets sent to the market that a given company’s share price may be overvalued. The company’s stock price actually went up following the announcement, and I think two key factors are at play here.
The first is the realization among investors that Algonquin’s balance sheet will remain very strong following this move, allowing for more in the way of debt creation as needed to fund growth projects rather than the company’s capital needs.
The $900 million raised by Algonquin in this offering will more than cover the capital needs of this utilities player for some time. With a divided yield of approximately 4.5% at the time of writing, and a yield that continues to grow around the mid-single digits each and every year, investors ought to consider this stock as an attractive income opportunity for the long term.
Invest wisely, my friends.
