Assessing AltaGas (TSX:ALA) Valuation After 6% Dividend Hike Signals Confidence in Future Cash Flows

AltaGas (TSX:ALA) just gave income investors something new to chew on, with its Board approving a 6% boost to the annual dividend for 2026. This will lift the payout to CA$1.34 per share.

See our latest analysis for AltaGas.

The market seems to like that signal, with the share price around CA$41.48 helping drive a robust year to date share price return. The three and five year total shareholder returns show that longer term momentum has been steadily building.

If this dividend news has you rethinking your income strategy, it might be worth exploring pharma stocks with solid dividends as another way to uncover dependable payout opportunities beyond the utilities space.

Yet with AltaGas trading near CA$41.48 and analysts targeting roughly CA$46, plus a solid track record of total returns, investors may be wondering: is the market still underestimating its cash flow power, or already pricing in years of growth ahead?

Most Popular Narrative: 10.2% Undervalued

With AltaGas last closing at CA$41.48 against a narrative fair value of roughly CA$46.18, the story centers on durable, regulated growth and expanding exports.

Significant investments in utility modernization and infrastructure expansion (e.g., $2 billion since 2018, ongoing ARP and rate base growth, new customer connections, and projects like the Keweenaw Connector) position AltaGas to benefit from population growth, urbanization, and rising electrification demand. This is expected to support stable, inflation-protected revenue and long-term earnings growth.

Read the complete narrative.

Want to see what kind of revenue runway and profit multiple are baked into that valuation, and how long earnings are expected to hold up? The full narrative unpacks the growth curve, margin drift, and future earnings power that underpin this higher fair value.

Result: Fair Value of $46.18 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside story could be derailed if decarbonization policies curb gas demand, or if costly modernization projects face delays and tougher regulatory scrutiny.

Find out about the key risks to this AltaGas narrative.

Build Your Own AltaGas Narrative

If you see AltaGas differently or prefer to test your own assumptions, you can build a custom view in minutes, Do it your way.

A great starting point for your AltaGas research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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