Monthly Dividend Stock In Focus: Northland Power

Up to date on October 2nd, 2024 by Felix Martinez

Northland Energy (NPIFF) has two interesting funding traits:

#1: It’s providing an above common dividend yield of 5.2%, which is greater than double the 1.3% dividend yield of the S&P 500.
#2: It pays dividends month-to-month as an alternative of quarterly.
Associated: Listing of month-to-month dividend shares

You possibly can obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter, like dividend yield and payout ratio) by clicking on the hyperlink under:

Northland Energy’s mixture of an above-average dividend yield and a month-to-month dividend makes it interesting to particular person traders.

However there’s extra to the corporate than simply these components. Maintain studying this text to study extra about Northland Energy.

Enterprise Overview

Northland Energy is an unbiased energy producer that develops, builds, owns, and operates inexperienced energy tasks in North America, Europe, Latin America, and Asia. The corporate produces electrical energy from renewable assets, equivalent to wind, photo voltaic, or hydroelectric energy, in addition to clean-burning pure fuel and biomass on the market beneath energy buy agreements and different income preparations. Northland Energy owns or has an financial curiosity in 3.2 gigawatts of producing capability. The corporate was based in 1987 and is headquartered in Toronto, Canada.

Northland Energy drastically advantages from a robust secular development, specifically the shift of the whole world from fossil fuels to wash power sources. This shift has drastically accelerated because the onset of the coronavirus disaster about three years in the past.

The tailwind from this secular development is clearly mirrored within the development trajectory of Northland Energy.

Supply: Investor Presentation

The corporate has expanded from only one nation in 2015 to 6 international locations now. Throughout this era, Northland Energy has primarily tripled its producing capability.

Due to the important nature and the high-growth mode of its enterprise, Northland Energy proved primarily proof against the coronavirus disaster. As well as, due to its capability to go its elevated prices to its prospects, the corporate has proved resilient within the extremely inflationary surroundings prevailing proper now.

Progress Prospects

As talked about above, Northland Energy has a serious development driver in place, specifically the worldwide shift from fossil fuels to renewable power sources. This shift has drastically accelerated within the final three years and has a long time to run.

It is usually vital to notice that the majority renewable power sources had excessive manufacturing prices up to now, and thus, they wanted authorities subsidies to grow to be economically viable. Nevertheless, due to main technological advances, this isn’t the case anymore. The manufacturing value of photo voltaic and wind power has pronouncedly decreased, and therefore, renewable power sources can simply substitute fossil fuels these days. To supply a perspective, the price of solar energy has decreased from greater than $4 per watt to lower than $1 per watt during the last decade.

The first development drivers of Northland Energy are depicted within the chart under.

Supply: Investor Presentation

The corporate has a number of development tasks beneath improvement proper now, with a complete capability of two.4 GW. As the corporate’s present producing capability is just 3.3 GW, it’s evident that Northland Energy has immense development potential over the following a number of years.

Northland Energy reported sturdy monetary outcomes for the second quarter of 2024, pushed by excessive wind manufacturing from its offshore wind services. The corporate’s gross sales for the three months ended June 30, 2024, rose to $529 million, up from $472 million in the identical interval of 2023. Gross revenue elevated to $483 million, and web revenue noticed a major leap from $22 million in 2023 to $262 million in 2024. This development was largely on account of improved wind assets, contributions from New York’s new onshore wind tasks, and better demand within the EBSA section.

Along with its stable monetary efficiency, Northland Energy continues to progress on key improvement tasks. These embrace offshore wind tasks in Taiwan and Poland, in addition to an power storage undertaking in Canada. The profitable execution of those tasks stays a prime precedence for the corporate. In the meantime, Northland has been actively pursuing different improvement alternatives throughout its 9GW pipeline. The corporate additionally accomplished the sale of its curiosity within the La Lucha Photo voltaic Facility in Mexico, additional optimizing its portfolio.

Offshore wind power manufacturing rose by 14%, leading to $241 million in gross sales for the quarter. Adjusted EBITDA elevated by 8% to $131 million, primarily pushed by larger wind manufacturing throughout all offshore services. Nevertheless, there have been some challenges, together with decrease income from Canadian photo voltaic tasks on account of diminished photo voltaic assets and grid outages in Germany. Regardless of these hurdles, Northland’s total efficiency displays its sturdy place within the renewable power sector.

Dividend & Valuation Evaluation

Northland Energy is at the moment providing an above common dividend yield of 5.2%, which is greater than double the 1.3% yield of the S&P 500. The inventory is thus an fascinating candidate for income-oriented traders however the latter needs to be conscious that the dividend is affected by the fluctuation of the change fee between the Canadian greenback and the USD.

Northland Energy has a payout ratio of over 100% however a wholesome steadiness sheet, with a steady BBB credit standing from S&P. Given additionally the promising development prospects of Northland Energy and its resilience to recessions, its dividend (in CAD) needs to be thought-about protected with some threat if incomes don’t enhance.

Then again, traders ought to notice that Northland Energy has did not develop its dividend meaningfully during the last decade, primarily as a result of devaluation of the Canadian greenback vs. the USD. Consequently, it’s prudent to not count on significant dividend development going ahead.

Ultimate Ideas

Northland Energy is flourishing proper now, with report earnings in 2022. Even higher, the corporate has ample room to proceed rising for many years. Furthermore, the inventory is providing an above-average dividend yield of 5.2%, with a excessive payout ratio. It thus combines many optimistic options, that are appropriate, not just for income-oriented traders, but additionally for growth-oriented traders.

Nevertheless, traders needs to be conscious that the inventory is extremely unstable in periods through which its development decelerates. Subsequently, solely affected person traders, who can ignore short-term strain and stay centered on the long term, ought to take into account buying this inventory.

Furthermore, Northland Energy is characterised by exceptionally low buying and selling quantity. Which means it’s arduous to ascertain or promote a big place on this inventory.

Don’t miss the assets under for extra month-to-month dividend inventory investing analysis.

And see the assets under for extra compelling funding concepts for dividend development shares and/or high-yield funding securities.