Yield soon a dirty word... Algonquin has great pipeline, a low payout ratio and one of the lowest debt loads in the space. But they are going to get caught up in the yield rotation and things might be ugly for a while. The big boys are starting to rebalance, nothing could be more obvious,
Yield oriented securities will never go out of favor, it's just that they are going to be repriced (a process that has started) as long bond yields rise. Hopefully algonquin will hold up better than most because of the pipeline. Its been one of my best for the past 4 years, I intend to just keep holding either way, But I think things will be soft for a while -
If Algonquin were to be repriced to a 5.5% yield, which would be pretty normal in a standard long bond yield environment, that at the moment equals a share price of $6.18, so I wouldn't underestimate the damage rising yields can do to income securities.
It's time to decide on a stop out, if you don't have one, depending on your tolerance. We have not seen a rising rate environment for years, and people are completely out of touch with the effect that can have, just like by 2007 no one could recall what risk management was.