Separated from the woes of its former sponsor SunEdison Inc., yieldco TerraForm Power Inc. is focusing on a number of strategic initiatives to grow its wind and solar portfolio, and restore and grow a quarterly stock dividend on the company's Class A common stock that has been dormant since 2015.
TERP management sees multiple paths over the next five years toward achieving its growth plan, including: cash flow enhancements through productivity improvements; generating fleet investments, including asset repowering, site expansion and the addition of energy storage to existing sites; and asset acquisitions in North America and Western Europe.
In October 2017, a consortium of investors led by Brookfield Asset Management Inc., or BAM, acquired a 51% stake in TERP, with BAM assuming sponsorship of the company, through which it will provide TERP business development resources and capital markets support to enable it to achieve its growth targets Over the long term, TERP expects to deliver total shareholder return of 12%, comprised of a dividend yield supported by a payout of 80% to 85% of cash available for distribution, or CAFD, and annual dividend growth of 5% to 8%.
TERP has not paid a quarterly dividend since the third quarter of 2015. The company is targeting a 2018 dividend paid of $0.72 and growth of at least 6% on a compound annual basis to $0.90 by 2022. Based on TERP's January 10 closing price, the company's targeted 2018 dividend equates to 6.3% yield, in line with the yieldco group average of 6.1%.
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