If you’re looking for a long-term buy-and-hold play on renewable infrastructure, look no further than Hannon Armstrong Sustainable Infrastructure Capital (HASI), notes growth and income expert Jimmy Mengel, editor of The Crow's Nest.

The sustainability real estate investment trust (REIT) has three positive catalysts creating a tailwind for the company.

First, the new administration in Washington is shifting its focus to sustainable infrastructure. Second, real estate has proven the most profitable investment in recent history, and REITs provide everyday investors the opportunity to get in alongside those who have enough capital to purchase property.

Hannon also sports an attractive 2.48% dividend yield. It's grown its dividend for the last two years, increasing by an average of 1% each year.

As a bonus, management is experienced and focused on making money. CEO Jeffrey Eckel explains that as a 40-year-old company, Hannon is the first U.S. public company to invest solely in climate change solutions.

Deeply connected to the green energy space, Eckel has held positions with the Maryland Clean Energy Center and the U.S. Department of Energy’s Secretary of Energy Advisory Board (SEAB) Task Force on Federal Energy Management, which means he knows the right people to accomplish Hannon's goals. He currently serves on the board of trustees at the Nature Conservancy of Maryland and D.C. 

And although a climate-focused administration in Washington helps Hannon meet its objectives more easily, it's not necessary to the success of the company, as is evidenced by its 25% increase in share price per year from 2015 to 2020. From the lows of March 2020 to the highs of January 2021, shares rose about 230% but have since traded lower as the market has pulled back.

However, J.P. Morgan recently upgraded its price target on Hannon from $66 to $70, as it believes the alternative energy sector will create supply chain disruptions, causing near-term volatility and attractive buying opportunities.

The company has also been able to raise cheap capital through bonds rated BB+ with a more-than-3% yield, and it's beaten consensus earnings estimates in each of the last four quarters.

Hannon's mammoth pipeline contributes to this growth, as it's disrupting the decades-old energy, transportation, and agriculture sectors. These areas of the economy are rife for disruption and can provide ample investment opportunities for those forward-looking enough to get on board.

Hannon generates income through its $2.9 billion real estate portfolio that includes investments in projects spanning three markets — what it calls “behind-the-meter,” “grid-connected,” and “sustainable infrastructure.” And the revenue potential here is unmatched in the industry.

Its behind-the-meter investments focus on creating energy-efficient facilities, including universities, government and corporate offices, restaurants, and even entire communities.

It reduces carbon emissions by investing in small-scale, onsite power generation like roof-to solar panels and improving heating and lighting systems. The energy savings here are used to pay the company, boosting its cash flow.

Its grid-connected offerings include solar, wind, and energy-storage projects that sell power to utilities and corporations through the power grid.

Its smallest source of income is its sustainable infrastructure, where the company invests in ecological restoration, conservation, and stormwater remediation. But Hannon expects this sector to rapidly expand as communities face more environmental challenges from climate change.

Even though investors may have doubts over Washington's ability to pass new infrastructure laws or even the impact of climate change, Hannon will continue to focus on making communities more resilient and self-sustainable. And as a fellow Maryland company, Hannon is helping us right here in our backyard.

Although it's not a household name, Hannon is financing the future of energy. And that's something we want to get behind. We're buying Hannon Armstrong Sustainable Infrastructure Capital as a long-term play on clean energy infrastructure financing.

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