A List of 19 YieldCo Stocks to Invest In

You may have heard of “YieldCos” in the news over the past year as they continue to grow in popularity. Yield companies or “YieldCos” bundle renewable and/or conventional long-term electricity generating assets in order to generate predictable cash flows resulting from the sale of said electricity through long term contracts. In the past few years, many solar companies have been creating yieldcos in order to secure lower-cost capital as part of cost reduction initiatives in the solar industry. Solar isn’t the only type of yieldco though. Exposure to hydro and wind are also offered through yieldcos in addition to traditionally produced electricity from natural gas. In May of this year, the Global X YieldCo ETF (NASDAQ:YLCO) began trading offering investors a diversified way to play this theme. This ETF is based on the “Indxx Global YieldCo Index”. While nothing but good things can be said about the benefits of diversifying through ETFs, it’s also important to see what’s under the hood before investing. As we learned from the Hanergy debacle, sometimes it may be better to create your own mini-ETF or motif to avoid any stocks that may carry excessive risk at the moment; like Chinese solar companies. Let’s take a closer look at the 20 companies in the YLCO ETF.

Firstly, we see  4 yieldcos that are only traded in Canada which represent 20% of the overall portfolio by market cap (market cap in USD billions) :

 Company Name Type Ticker Yield Mkt Cap
Northland Power Inc. Nat. Gas NPI 6.75 2.04
TransAlta Renewables, Inc. Wind/Hydro RNW 6.72 1.81
Innergex Renewable Energy, Inc. Multiple INE 5.78 0.83
Capstone Infrastructure Corp. Multiple CSE 9.74 0.22

Then we have 6 yieldcos that are only traded in the U.K. which can be seen below (market cap in USD billions):

Type Ticker Yield Mkt Cap
The Renewables Infrastructure Group Ltd. Wind/Solar TRIG 5.95 1.04
Greencoat UK Wind Plc Wind UKW 5.48 0.82
Bluefield Solar Income Fund Ltd. Solar BSIF 6.73 0.45
NextEnergy Solar Fund Solar NESF 5.3 0.29
Foresight Solar Fund Solar FSFL 5.94 0.45
 John Laing Environmental Assets Group Ltd Multiple JLEN 2.74 0.37

This leaves us with one last company that is traded outside the U.S which is a Spanish company called Saeta Yield and which makes up 3% of the portfolio by market cap:

 Company Name Type Ticker Yield Mkt Cap
Saeta Yield (SPAIN) Wind/Solar SAY 2.77 0.83

This gives us 10 remaining companies that are all U.S. traded, but that are not all yieldcos. Sunedison (NYSE:SUNE) and FirstSolar (NASDAQ:FSLR) are included in the index. We’ll drop Sunedison because while they were responsible for the creation of Terraform (TERP), they are not a a yieldco. First Solar helped create the most recent solar yieldco IPO, 8point3, so we’ll replace them with 8point3. (Wondering where the name 8point3 came from? It’s the amount of time it takes sunlight to reach the earth; 8.3 seconds). We are then left with the following 8 U.S. traded yieldco stocks:

 Company Name Type Ticker Yield Mkt Cap
TerraForm Power Solar TERP 4.31 4.23
Brookfield Renewable Energy Partners LP Hydro BEP 5.73 4.15
Abengoa Yield Plc Multiple ABY 6.3 2.54
Pattern Energy Group, Inc. Wind PEGI 5.94 1.82
NRG Yield, Inc. Multiple NYLD 4.15 1.14
NextEra Energy Partners Wind/Solar NEP 2.3 0.76
Hannon Armstrong Sustainable Infrastructure Multiple HASI 5.18 0.65
8point3 Solar CAFD 5.27 0.318

While the fact that all of these 8 yieldcos trade here in the U.S. provides us with some level of comfort, there’s really no good reason not to invest in this ETF if you want some broadly diversified international exposure to yieldcos. Even though YLCO seems to needlessly include some small weights in FirstSolar and Sunedison, it still seems like the best way to invest in yieldco stocks at the moment. However, if you want to stick with just U.S. traded yieldcos, you can join Motif Investing for free and then create a motif which acts as your own mini-ETF. We created such a motif with these 8 stocks using a market cap weighting and a maximum weight of 20%, the results of which can be seen below:

Nanalyze_US_YieldCos

Now we have a basket of U.S. traded yieldcos that provides us with 65% exposure to the underlying “Indxx Global YieldCo Index” and a yield of around 5.15%. Note that for all of the above yieldcos with a type of “multiple”, most are dabbling in electricity production that is not renewable. We had always assumed that yieldcos were only involved in renewable energy production but as we learned this is not the case. In a future article, we’ll look to see just how much renewables exposure can be had in the companies that are also involved in conventional electricity production.

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2 thoughts on “A List of 19 YieldCo Stocks to Invest In

    1. Best way forward is to master the English language first! You have to be able to communicate in order to properly invest in the markets.

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