In a broad sense, the energy and utilities sectors in the Canadian market have been hit quite hard in recent months as investors have continued to move away from interest sensitive names and toward growth plays as interest rates continue to rise, and are expected to do so for quite some time.
That being said, specific opportunities persist in this space, and I'll be discussing one of my top picks for yield and growth in the next two to five years.
Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN) carries a 5% yield and has consistently grown its distribution over time, utilizing excellent free cash flow growth and accretive acquisitions to enhance shareholder distributions over time.
The company's playbook is one which is seen to be more growth-oriented among many money managers, and the company's management team has seemingly done an excellent job of integrating the firm's targets well, specifically those in the United States.
One of the key reasons I like this name for Canadian investors is that this company trades on the TSX but has its dividend paid out in U.S. dollars, allowing investors to hedge their portfolio against a declining Canadian dollar relative to the greenback.
In recent years, this has provided for an increased yield relative to other companies who make their distributions in CAD, and has provided a nice tailwind to investors to cushion some slight share price depreciation due to a sector-specific selloff which has hit nearly every firm in recent quarters.
Invest wisely, my friends.
