TransAlta Renewables Inc (TSX:RNW) has been struggling in 2018, with its share price down more than 16% since the start of the year. A lack of growth has kept investors unexcited about the stock despite its long-term growth potential. TransAlta Renewables is not a stock suitable for short-term investors as it’ll likely take a while before the company achieves significant market share.
The move toward renewable energy is a very slow and steady one, and TransAlta has achieved decent results over the years, but in 2018 it just hasn’t seen much growth in its top line, although it has been able to stay profitable.
This isn’t all bad news for investors, though. TransAlta Renewables pays a very generous monthly dividend which is now yielding more than 8.3% as a result of the decline in price it has gone on this year. And if we look at the company’s cash flow over the past 12 months, it has generated $255 million in free cash, a little more than the $233 million it has paid out in dividends. While ideally there’d be more of a buffer there, it suggests that the dividend is not under any pressure to be cut. And the stock may need to keep it intact in order to prevent an even bigger sell-off from taking place.
Currently, TransAlta Renewable stock trades slightly above its book value and it could be an appealing buy for growth, value, and dividend investors, as it offers something for everyone. While the stock is not quite at its 52-week low, it’s only about a dollar away from it and it could be a great time for investors to score a great deal.
