Algonquin Power stock plunges by double-digits on 40% dividend cut

Shares of Algonquin Power & Utilities (AQN.TO)(AQN) fell sharply in early trading on Friday as the company slashed its dividend by 40 per cent. At the same time, Algonquin says it has struck a deal to sell its renewable energy business for up to US$2.5 billion. Both moves follow the company’s plan to narrow its focus as a “pure-play” utility.

Oakville, Ont.-based Algonquin cut its quarterly dividend to US$0.065 per common share from US$0.1085 US cents, where the payout has sat since a previous 40 per cent cut in early 2023. The company’s dividend has been historically high relative to peers, drawing criticism from activist investors and stock analysts amid concerns about the company’s debt load.

Toronto-listed shares fell 10.13 per cent to $7.63 as at 9:36 am ET, their lowest since November 2023.

On Friday, Algonquin also announced a long-awaited deal to sell its renewable energy business. New York-based LS Power has agreed to purchase the assets for up to US$2.5 billion, excluding debt. Algonquin says the deal is expected to close in the fourth quarter of 2024 or the first quarter of 2025. The company says the proceeds will mainly go towards recapitalizing its balance sheet.

“The transaction proceeds and valuation are compelling,” CEO Christopher Huskilson said on a conference call with analysts on Friday morning. “I’m more convinced than ever that our current path towards a pure-play regulated utility supports our goal to create long-term value.”

More to follow.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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