We were lucky to exit pre-market on the dividend cut announcement. The stock has gone far lower than what we would expect and is now turning into a value play. We tell you how we are playing it and also look at the preferred shares yielding 7%.

Algonquin Power & Utilities Corp. (NYSE:AQN ) Q3 2024 Earnings Conference Call November 7, 2024 10:00 AM ET Company Participants Brian Chin – Vice President-Investor Relations Chris Huskilson – Chief Executive Officer Darren Myers – Chief Financial Officer Conference Call Participants Rupert Merer – National Bank Mark Jarvi – CIBC Sean Steuart – TD Cowen Rob Hope – Scotiabank Operator Hello, and welcome to the Algonquin Power & Utilities Corp. Third Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Canada's Algonquin Power & Utilities Corp said on Friday that it is selling its renewable energy business, excluding hydropower operations, to a wholly-owned subsidiary of LS Power for up to $2.5 billion.

Algonquin is looking to divest its renewable energy group to address debt and keep its investment-grade credit rating. The utility is currently paying out a 7.1% dividend yield that's 224% covered by adjusted FFO realized during its most recent quarter. A sale of its 42% stake in Atlantica Sustainable Infrastructure would have to be completed against poor stock market conditions for renewables.

The recent sell-off in utilities, financials, and precious metals stocks is due to rising treasury yields as a result of hawkish comments from Federal Reserve officials and robust economic data. We explain why this sell-off is unlikely to last. We also share some of our top picks that we are buying on the dip.

Fintel reports that Starboard Value has filed a 13D/A form with the SEC disclosing ownership of 34.89MM shares of Algonquin Power & Utilities Corp (AQN).

While a sale of the Renewable Energy Group could simplify Algonquin's story with investors, risks are associated with doing so.

Algonquin just cut its dividend to common shareholders by 40% for a rightsized 5.4% forward yield. This was on the back of interest expenses up 62% year-over-year during its fiscal 2022 fourth quarter and against a total debt position of $7.55 billion.

The company's stock fell hard, but investors should think twice before buying this discounted high-yield stock.

Will Algonquin stock recover in 2023? Its upcoming investor and analyst day event should give you the answers.