Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
If you’re looking to enhance your dividend income and strengthen your investment portfolio, dividend reinvestment can be a great strategy. Investors use dividends to purchase additional shares, maximizing the effects of compound interest. However, the success of a dividend reinvestment strategy depends on selecting the right stocks, such as the Canadian renewable energy company Northland Power (TSX:NPI).
When choosing stocks suitable for a dividend reinvestment strategy, consider factors such as dividend yield, performance stability, dividend history, and volatility to ensure long-term returns. Companies in a mature industry cycle usually exhibit less volatility in sales and profit growth, supporting ongoing dividend payments. Additionally, a company should have a solid dividend history and a commitment to maintaining or increasing dividends in the future.
Northland Power is a leader in the renewable energy sector, with a high dividend yield of 5.6% and a stable business model, making it ideal for dividend investors seeking steady income. It focuses on generating power from clean resources such as wind, solar, and thermal energy, benefiting from the global shift towards renewable energy. Founded in 1987, Northland Power has grown into one of Canada’s major independent power producers, with assets distributed across Canada, Europe, Latin America, and Asia. The company has significantly invested in offshore wind farms in recent years, with substantial business growth, especially in Europe.
For the quarter ending June 30, 2024, the company reported revenue of $2.42 billion, up 12.20% year-over-year. Despite substantial investments geared towards future growth, Northland Power remains profitable, with an operating profit margin of 28.27% and a net income of $66.05 million over the trailing twelve months (TTM). These figures indicate the company’s ability to expand operations while continuing to enhance profits, laying a strong foundation for ongoing and possibly increasing dividend payments.
NPI currently has a forward annual dividend of $1.20 per share, with a dividend yield of 5.6%. The five-year average dividend yield is 3.79%, highlighting the company’s longstanding commitment to shareholder returns. Although the payout ratio is as high as 500%, it is important to note that Northland Power maintains strong cash flow. The development projects are expected to drive future earnings growth, supporting the sustainability of its dividends.
