The year got off to a spectacular start for my tenth annual Ten Clean Energy Stocks model portfolio. (You can read about the performance in 2016 and prior years here.) The portfolio and its income and growth subportfolios were up 9%, 8%, and 14%, respectively. Clean energy stocks in general also did well, with my three respective benchmarks up 2 to 3% each. (I use the YieldCo ETF YLCO as a benchmark for the income stocks, the Clean Energy ETF PBW as a benchmark for the growth stocks, and an 80/20 blend of the two as a benchmark for the whole portfolio.) The Green Global Equity Income Portfolio (GGEIP), an income and green focused strategy I manage returned 5%.

Detailed performance is shown in the chart below:

10 for 17 jan total return

I attribute the impressive January numbers to several factors.

  • Despite anti-climate rhetoric, renewable energy has reached a tipping point, and investors are beginning to realize that (as I said in a recent interview on CNBC Asia) the Trump Administration will be less of a headwind for clean energy than a reduced tailwind.
  • A rebound from December tax-loss selling (SSW-PRG and ASPN).
  • Expected good new materializing (ABY)
  • Unexpected good news (NEP).

    • I’ll look into these faqctors in detail in the individual stock discussion below.

    Stock discussion

    Below I describe each of the stocks and groups of stocks in more detail.  

    Income Stocks

    Pattern Energy Group (NASD:PEGI)

    12/31/16 Price: $18.99. Annual Dividend: $1.63 (8.6%). Expected 2017 dividend: $1.64 to $1.67. Low Target: $18. High Target: $30.  
    1/31/17 Price: $19.74. YTD Dividend: $0. Annualized Dividend: $1.63. YTD Total Return: 3.9%

    Pattern is a Yieldco owning mostly wind projects in North America. With little news in January, the stock advanced along with other Yieldcos recovering from a Trump-inspired sell off.

    8point3 Energy Partners (NASD:CAFD)
    12/31/16 Price: $12.98. Annual Dividend: $1.00 (7.7%). Expected 2017 dividend: $1.00 to $1.05. Low Target: $10. High Target: $20. 
    1/31/17 Price: $13.54. YTD Dividend: $0. Annualized Dividend: $1.00. YTD Total Return: 4.3%

    Solar-only Yieldco 8point3 reported fourth quarter earnings on January 26th. Although the company upped their guidance and distribution, analysts were not thrilled. The YieldCo is considering refinancing some of its company level, interest-only debt using project-level amortizing debt. In terms of safety of the stock, this is a good move because it eliminates refinancing risk. However, amortizing debt requires payment of both interest and principal, which will reduce cash available for distribution.  

    The concern is that this might lead to a future dividend cut, unless the company can continue to grow enough to offset the future principal payments.  Management thinks it can, since they issued guidance for 12% distribution growth in 2017.

    Hannon Armstrong Sustainable Infrastructure (NYSE:HASI). 

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