Hannon Armstrong Eyes Sustainable Infrastructure

07/24/2015 8:00 am EST

Focus: STOCKS

Bryan Perry

Editor, Cash Machine, Premium Income, Quick Income Trader, Instant Income Trader

When we can hitch our high-yield wagon to cutting-edge growth industries, it makes investing for income that much more exciting, suggests Bryan Perry, industry-leading income expert and editor of Cash Machine.

Much of the future for domestic energy use is being leveraged in the renewable energy sector, where vast sums of money are being allocated to drive down operational costs and provide for a cleaner environment.

With our latest recommendation, we zero in on a real estate investment trust that is central to this investment theme and will make for a very attractive conservative idea for both income and capital appreciation.

Hannon Armstrong Sustainable Infrastructure Capital (HASI) provides debt and equity financing to the energy efficiency and renewable energy markets in the United States.

The REIT offers energy efficiency products that reduce a building or facility’s energy use or costs.

Its renewable energy projects deploy cleaner energy sources—comprising solar and wind—to generate power production. The company qualifies as a real estate investment trust for US federal income tax purposes.

It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The stock pays a current dividend yield of 5.22%.

In the first quarter of 2015, the company posted excellent results and provided strong forward guidance. HASI reported core earnings of $7.4 million, or $0.27 per share, an increase of 35% over the same quarter last year.

Its portfolio totaled $885 million on March 31, 2015 and included $306 million of energy efficiency investments, $537 million of renewable energy (wind and solar) transactions, and $42 million of other sustainable infrastructure investments.

2015 revenue is forecast to grow by 26% to $39.06, compared with 2014, and accelerate by 51% to $54.6 million for 2016. Plus, 2015 earnings per share (EPS) of $1.07 is expected to jump by 20% to $1.29 for 2016.

With the kind of growth the company is displaying, dividend growth will be consistent and the stock price should keep on rising with each quarterly earnings report. This is an exciting investment opportunity.

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