RE:9-10%RusticHit wrote: Market will take this down to 9-10%yield they want more yield fo risk 6-7% yields are very safe like banks even Gic giving 5%
Dividend yield is not a measure that moves the stock price long term. It just represents the capital allowance that goes back directly to shareholders. This is why there are 0% yield that trade above 5% yield companies in the same business.
Cashflow from operations is a better measure of the business value. For Algonquin, in 2023, cashflow estimate provided in the presentation is 800M (USD). On cashflow, the reduced dividend represents 300M (USD), so about 37% of the cash they generate while prior to the cut, they would have paid 500M (USD), or about 63% of the cash generated. Per share, in CAD, the cashflow generated is around $1.55. The stock trades currently at about 6x cashflow, which means that it takes about 6 years for Algonquin to generate net cash equal to the current share price.
If you compare prices, Enbridge trades at about 10x cashflow from operations ($55 over around $5.5 per share). Due to its higher valuation (despite being a mix of midstream/distribution, which should trade lower than utility/renewable), Enbridge only yields more in dividends because they have a higher payout rate from their cashflow, at roughly 65%. At 10x cashflow, like Enbridge, Algonquin would trade at $15.50 CAD.
As to GICs, you can only get 1 year at 5%. Long term corporate bonds with ratings of BBB also trade at 5%, without any upside (dividend increase, share price increase).