Algonquin Power to cut dividend by 40%, provides downbeat profit outlook

Shares of Algonquin Power & Utilities Corp.
AQN,
-4.26%

AQN,
-4.67%
turned lower to fall 2.2% in premarket trading Thursday, after the utility company said it was taking “decisive actions” to strengthen its financial and strategic position, including cutting its dividend by 40% and selling assets. The company said the first-quarter dividend will be lowered to 10.85 cents a share from 18.08 cents. Based on Wednesday’s stock closing price of $7.40, the new annual dividend rate cuts the implied dividend yield to 5.86% from 9.77%, which compares with the yield for the SPDR Utilities Select Sector ETF
XLU,
-0.19%
of 2.86% and the implied yield for the S&P 500
SPX,
+0.37%
of 1.70%. Among other actions, the company said it’s targeting about $1 billion of additional asset sales, will suspend its dividend reinvestment plan for its common stock and won’t pursue new equity financings through 2024, but will continue to pursue the Kentucky Power acquisition. The company said it expects 2023 adjusted earnings per share of 55 cents to 61 cents, which is below the current FactSet consensus of 69 cents. The stock has tumbled 27.6% over the past three months through Wednesday, while the S&P 500 has gained 11.0%.