LONDON, November 26, 2014 /PRNewswire/ --
The recent plethora of yield company spin-offs, as well as similarly missioned "total return" companies, has provided visibility to the sector, validating it further, and offering investors a unique way to play the alternative energy/renewables space in terms of both yield and growth potential. While volatility is likely to be high, overall, we are bullish on the alternative energy/renewables sector, and believe the "total return" concept offers investors the potential for diversification, higher yield and more secured cash flows associated with renewable assets. In this report, we initiate coverage of the alternative energy/renewables sector, and present an overview of climate change, snapshots of the main subsectors and spotlights on select "yieldco/total return" companies in the space.
We are positive on the overall alternative energy and renewables space based on the following expectations: a) increased demand driven by global population and energy trends; b) increased demand for cleaner energies in order to address climate change impacts and resource shortages; and c) expected transition of companies from niche players to more mainstream energy/utility providers. We have chosen to focus on the "yieldco/total return" companies herein; in shifting discussion away from preoccupation with the labyrinth that is global regulation, these companies have enabled better visibility on underlying asset portfolios, which often generate cash flow secured by long-term power purchase agreements. As a result, they are able to pay dividends now, provide potential for capital appreciation in the future, and have simplified the investment thesis.
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