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What are we looking for?

Powerful dividends from Canadian renewable energy – with less risk.

The screen

Newly minted Ontario Premier Doug Ford this week recalled legislature for a rare summer sitting. High on his agenda is cancellation of a Prince Edward County wind farm project by a German wind-power developer. While White Pines – a proposal for nine industrial turbines – has attracted opposition in Eastern Ontario, it also speaks to the inherent risks for renewable energy projects worldwide.

Whether they rely on sun, wind, tides or ocean currents, most renewables lean heavily on government subsidies and political support – supports that can erode overnight.

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We think a far better way to invest in renewable power is through companies active in the area, but with a sound base of other business to help offset risk.

Our search started with Canadian corporations holding renewable power assets as just part of their broader operations. That diversity also supports dividend sustainability.

We then applied our TSI Dividend Sustainability Rating System. It awards points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
  • One point if the company is a leader in its industry.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Our TSI Dividend Sustainability Rating System generated five stocks. While Enbridge Inc. has wind and solar projects in Canada, the United States and Europe, regulated pipelines form its core business. By the same token, rival TransCanada Corp. has wind farms in Quebec. Brookfield Renewable Partners LP, Algonquin Power & Utilities Corp. and Innergex Renewable Energy Inc. all offset their own wind and solar power generation with subsidy-free hydroelectric power.

We advise investors to do additional research on investments we identify here.

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Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

Canadian companies active in renewable energy

Ranking*CompanyTickerDividend Sustainability RatingDiv. Yield (%)PointsMkt. Cap. ($ Bil.)Recent price ($)1Y Total Rtn. % 
1Enbridge Inc.ENB-THighest5.81180.046.70-8.6
2TransCanada Corp.TRP-THighest4.81150.757.06-8.3
3Algonquin Power & Utilities Corp.AQN-TAbove Average5.395.912.59-3.0
4Brookfield Renewable Partners LPBEP-UN-TAbove Average6.3812.439.86-3.7
5Innergex Renewable Energy Inc.INE-TAbove Average4.971.913.80-4.7

Source: TSI Dividend Advisor

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.


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