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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hi 5i,
sorry for beating this horse but I would appreciate your thoughts on AQN.
These are speculative events. Can you prioritize these possible future events and give some high level reasons they might do it. Priority #1 being the most likely if it ever happens. (a) approx. dividend cut by 50%. (b) issuing more shares. (c) buying back shares. (d) issuing more debt. (e) asset sales. (f) others? I noticed that there has been some insider buying buy the CEO very recently. Thanks for your thoughts!
Read Answer Asked by Ian on November 21, 2022
Q: I am aretired dividend investor and tend to keep stocks. My full position in AQN is nearing a half position (its in a RRIF so no tax loss selling). The 9.4% dividend for a Utility is extremely attractive. I am thinking of buying some more. I have read the questions and I realize a dividend cut could happen but since they will not report again until March 1, is a cut, if there is one, before then unlikely?
Read Answer Asked by Don on November 21, 2022
Q: The only energy holding I have currently is SU at 5% of my total portfolio. Given conflicting economic predictions for the next 12-18 months, would you suggest I increase my energy holdings or stand pat? If increase, by what % and could you provide 2 or 3 names with some growth and dividends >2%? Thank you.
Read Answer Asked by Maureen on November 15, 2022
Q: Hi Peter, Ryan, and Team,

Your last answer to a 5i member (Peter) regarding the sustainability of AQN’s dividend is more positive than David Berman’s piece in today’s Globe & Mail.

In light of his article, where he repeated a comment by a Scotiabank analyst: “We have taken all dividend growth out of our model and, even still, the payout ratio remains 103 per cent of earnings per share in 2023 and 97 per cent in 2024,” Robert Hope, an analyst at Bank of Nova Scotia, said in a note.

Algonquin’s management said last week that it was targeting a dividend payout ratio of 80 per cent to 90 per cent, meaning that the company expects to distribute no more than 90 per cent of its profits as dividends over the longer term.

“This payout ratio target would be above its peers and, in general, makes growing the business without external equity more difficult. If the company does pursue a full reset, we could see a reduction in the dividend,” Mr. Hope said.

Is 5i still of the opinion that the dividend won’t be cut? My feeling is that if in fact the dividend is cut, the stock will decline even further, and as always, welcome your thoughts.
Read Answer Asked by Jerry on November 15, 2022
Q: Sold half my position in VET in the mid $33 back in summer and I wish I would have sold the whole part. Looked at VET's Q3 report and it seems that it is the threat of a European "excess profit tax" that has pummeled the stock lately and I understand why and think the sell down is warranted. But the way I understand it there could be a unseen upside in VET in Q1 of 2023 when the VET's purchase of Shell's portion of the Corrib gas plant is completed. According to VET all of the 2022 Cash flow from Corrib should go to VET. When that cash flow is added to VET's income statement could they restate their 2022 earnings to the upside? I am not sure how this works but it seems to me that there is some 'hidden' earnings in VET that can not be realized until the sale of Shell's position to VET is officially completed. One thing we know is that Corrib definitely made money in 2022. Could the increased earnings from Corrib be enough to counter the Euroean excess profit tax. Long question and I hope you understand what I am trying to get at.
Read Answer Asked by Paul on November 15, 2022
Q: I wish to add more energy stocks to my portfolio for diversification. I have ENB and SU. I am thinking of adding GXE, PXT & TOU, all three seem to have very low or no debt, and either PPL or TRP. All for a 5-year hold. I do enjoy the high dividend yield but would still wish to have some growth and safety. Please feel free to add or remove any from my list of your choice, rank them from the best to the least, and each with a reasonable entry price. How long of a time frame would you recommend to spread over the additions?

Thank you again for your insight.
Roger
Read Answer Asked by Roger on November 15, 2022
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