Utilities sector

[fenders53]

(07-25-2021, 10:58 AM)crimsonghost747 Wrote:

(07-25-2021, 10:35 AM)fenders53 Wrote:

(07-25-2021, 09:54 AM)crimsonghost747 Wrote: Dilution has been their game for years, and will continue to be. Interest rates will definitely hurt them, just like they will hurt all utilities but yeah, more leverage here than what most of the big boys have.

I might indeed load up on some shares. If they can keep those 10% dividend increases going for a few more years, then I'd be sitting on a pretty great yield on cost while they figure out how to not go bankrupt just yet. This is a risky one, no doubt about that.

I listen to a lot of utility conference calls as I oft mention.  My UTEs also have their eyes on renewables growth.  They also make it clear they are going to act responsibly and grow with little or no new debt or share issue.  That works if last years new solar or windfarm farm goes instantly cashflow positive, which they have.  ALE will remain my spec UTE.  Their yield is close enough and I know they have adults in charge.  Just volatile enough to make option income every month and a good Div.  

If I was going to play AQN I would wait for the next capital raise because that is their published plan.  A share price dip would make the entry less risky, at least in the short-term.  Also it's a Canadian company with a majority of their revenue from the US.  I have no idea if they benefit from possible US infrastructure bills.  US jobs so maybe?

From what I can tell, the last real capital raise was in June. That is  the $16 to $15 dip you see in the middle of june. The one before that was July of last year. They do have an active ATM offer authorization but I guess this is more of a "little by little" way of raising capital and sales made through this are only reported on the quarterly reports?

I checked out the annual report, and sorted through some hypester youtube videos to find intelligent analysis from several.   Here is what I am sure of. 

-Payout ratio exceeds 100% and it has for most of the past five years, yet the dividend grows reliably at 10% so far.
-Share count goes up every year.
-They intend to spend about $9B for expansion in four years.  That is half their current market cap. 
-They were definitely caught up in the Texas winter storm failures.  So were a lot of UTEs. Is a charge against earnings coming?  I didn't look at last QTR report.  Next one is in a few weeks and I expect it will be enlightening.
-They are good at growing net income and this sector isn't going away.  There is no doubt management intends to grow the business quickly.       

An interesting UTE.  There are others on a similar path that pay no dividend at all yet.  My gut says they over promised on the dividend and there will be creative finance solutions that will keep a lid on the share price. IMO there is a price where the risk-reward is right, at least for a moderate term hold.

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