Algonquin Power & Utilities Corp T.AQN

BNN Friday on AQN

[Indicator]

BNN Host Question:  Is there any possibility they (AQN) would have to cut the dividend?

Ryan Bushell:

"I think there is a possibility now after today's news . . . with interest getting closer to 8% and with interest rates rising, definitely a warning sign, and with cash flow tight on these new aquisitions, they are going to need to see some cash flow come on":

"Holding with a view to buy, BUT they will want to see if it needs to be flushed out further with a dividend cut . . .  they have to have a chat with the company and see where things are at!"

https://www.bnnbloomberg.ca/ryan-bushell-s-top-picks-november-11-2022-1.1845278

Large shorts at play folks ....  dividend cut is not off the table ... yet! 

Good luck!

[svsingh83]

Analysts always go with the wind. Shorts can pull down price only upto a point. With possibility of a takeover by likes of Brookfield, shorts also got to tread carefully. Nobody likes to lose money.

[svsingh83]

PS Lot of oil and other companies had cut dividends. Most of those came back up.

[CANCDN]

Bushel is just upset he was buying when AQN was overpriced. For the 10,000 time, only 55% of actual cash flows are paid out at dividends. 

[NewOpportunist]

I prefer looking at distributable cash flow (DCF). I think when you talk about the 55% ratio, you take AFFO and cash dividends paid to derive your 55%? When you look at the first 9 months, AFFO was $606mn, divs (declared, not considering drips) $362 mn, which leaves $244mn. However, the company guided for $457mn in maintenance capex for the whole year, making the dividend coverage look inadequate

[CANCDN]

You make some valid points, but I dont think the intent in any utility is to ever to cover maintenance capex with cash flow. The entire premise of a utitly is to perform approved capex and fully recover the cost plus an agreed upon return (usually around 9-10%). The entire purpose of utilities is to perform as much mtce capex along with further rate base increase capex (new systems, lines etc

[CANCDN]

I just checked what RNW, completely different business. They are on the hook for 100% of maintenance capex. This is not how utilties operate..... I agree AQN needs to dump the renewable busiess.  Based on the last two calls with AQN, reading between the line, they will start selling off the renewables once they commission them and collect the tax credits. 

[CANCDN]

renewbale mtce cap ex is 35-50 million for 2022 regulated is 400-450 million for 2022. This a good thing for utilities and doesn't each cash flow. The renewable amount above does. i have a sneaking suspicion a lot of people don't understand how utilities work. 

[RayDonovan78]

Of couse it will be cut, its a no brainer.

[CANCDN]

  Your a landlord.... certainly you understand depreciation. What was your operating cash flows in the first few years of ownership after deprecation of your property? What was in your bank account Vs why was reproted as operating cash flows to the cra? when you sell (or sold) your rental property, did you market it with NOI from the property or did you sell it based on your operating