Solar Stocks Are The New Value Stocks
First Solar $FSLR was one of the few stocks to start the year on a positive note. The stock was up 8% in the first few days of trading in 2016.
The rally was sparked by an upgrade from Goldman Sachs $GS. The Goldman analyst said the stock could go up 50%.
The interesting call is based on the solar industry shifting from growth to value.
First Solar Yield Co Driving The Change to Value
A partnership between First Solar and Sunpower $SPWR is helping lead the change for solar stocks from growth to value. The two companies formed 8point3 Energy Partners LP $CAFD. This ‘yield company’ owns and operates solar power assets in order to generate revenue for investors.
CAFD has about 432 megawatts of solar projects in its portfolio, including 262 MW of utility-scale projects from First Solar and 170 MW of utility and other projects from SunPower.
First Solar and SunPower executives have said the yieldco will help them fund new projects, lower the overall cost of capital and potentially improve the valuation of their respective project development businesses.
This is a huge development for FSLR and the solar industry in general. This partnership essentially creates a new source of demand for FSLR and SUNE products.
Needless to say, the demand created by the yieldco gives much more visibility to the future growth for FSLR. This could be the blueprint for other solar companies to scale up production. What’s more, it could also put solar power on the fast track to grabbing more market share away from traditional energy sources.
Growing Dividends From The First Solar Yield Co
CAFD announced a 3.5% hike in its quarterly distributions in the 4th quarter. The increase brings the annual payout to 87 cents per share. The annual yield on the distribution is 5%.
And it looks like CAFD and other yieldcos should continue to grow.
Don’t forget, the Paris climate deal, the U.S. government’s extension of solar tax credits, and California raising its renewable energy mandate all benefit the solar industry.
Investors looking for dividend growth should be taking a close look at solar stocks and the yieldcos.
An ETF To Own The First Solar Yield Co
Global X YieldCo ETF $YLCO tracks an index of global Yieldcos. These companies are income-producing machines that have been spun off from a parent company.
The spinoffs mostly produce power from renewable sources like wind and solar. They are the best way to play the solar energy industry shifting from growth to value.
After all, they are utilities stocks based on renewable energy.
Good Investing,
Corey Williams
ETF Trading Research
Note: Corey Williams writes and edits ETFTradingResearch.com. Sign up for our free ETF reports and free e-letter at http://www.etftradingresearch.com/free-sign-up. We’re devoted to helping you make more money from ETFs.
Category: ETFs
