Utility stocks are supposed to be safety nets or defensive assets, but not when interest rates are sky-high. Thus far, the sector is one of three worst performers in 2024. TransAlta (TSX: TA) and Boralex (TSX:BLX), in particular, own renewable energy assets and pay decent dividends yet continue to underperform.
Avoid both dividend stocks and instead consider investing in Secure Energy Services (TSX:SES) in the industrial sector, the third best performing sector. In addition to the market-beating return (+22.1%), the yield is more attractive, and the payout is safe.
Evolving markets
TransAlta’s earnings attributable to shareholders in Q1 2024 beat expectations, although it declined 24.5% to $222 million compared to Q1 2023. Furthermore, free cash flow (FCF) and cash flow from operating activities fell 21.7% and 47.2% year over year respectively to $206 million and $244 million.
The $3 billion company operates electrical power generation assets in Canada, the United States, and Australia. It provides clean and reliable power to municipalities, medium and large industries, businesses, and utility customers. TransAlta is one of Canada’s largest wind power producers and Alberta’s largest hydroelectric power producer.
Since green development is on hold in Alberta, management will focus on other core jurisdictions, such as the U.S. and Western Australia, to secure risk-adjusted returns within stable markets. At $9.84 per share (-10.1% year to date), the dividend offer is 2.44%.
Robust pipeline
As of this writing, Boralex investors are down 10.7% year to date but partake in the 2.21% dividend. The share price of $29.92 is higher than TransAlta and Secure Energy Services. This $3.1 billion power company develops wind, solar, and hydroelectric energy production facilities and owns energy storage sites in Canada, France, the U.K., and the U.S.
In 2023, net earnings soared 1,337.5% to $115 million versus 2022 due to strong wind farm performance and asset commissioning in France. Discretionary cash flows increased 7.2% year over year to a record $179 million. Still, the record results don’t show on the stock’s performance. The trailing one-year price return is -22.3%.
Patrick Decostre, President and CEO of Boralex, said two major projects are ongoing, with commissioning in Q4 2024. Two secured-stage projects are progressing according to plan. The company submitted bids (solar and storage) in New York. “We can successfully complete these various projects, which are spread over the next several years,” he said.
Strong industry fundamentals
Secure is in ann environmental and energy infrastructure business that operates in the waste management industry. The network of this $3 billion company extends throughout Western Canada and North Dakota. 2024 could be a banner year, given the impressive first-quarter results.
In the three months ended March 31, 2024, revenue declined 13% year over year to $360 million, while net income climbed 667.3% to $422 million compared to Q1 2023. Secure sold 29 facilities to Waste Connections for $1.2 billion on orders by the Competition Tribunal.
Management said Secure is extremely well positioned for success due to strong industry fundamentals and growth opportunities. The expanded Trans Mountain pipeline will soon begin operations. Furthermore, the waste processing facilities currently only operate at about 60%.
More than secure
Secure Energy is a winning investment, evidenced by the 188% return in 3 years. At $11.41 per share, the 3.51% dividend yield is safe owing to the low 20.6% payout ratio.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
