TerraForm Power Inc. (NASDAQ:TERP) continues to trade higher following Brookfield’s Asset Management 51% stake acquisition. The stock is up by more than 40% over the past month, much to the excitement of investors who had bought the stock prior to the acquisition.
Dividend Yield
Fuelling investors’ confidence in the stock, is the fact that Terraform has announced plans to offer a dividend of $0.72 a share, over the next year. The distribution represents a payout ratio of 80% to 85% of the company’s available cash. It also implies a dividend yield of 5.4% today.
Brookfield’s 51% stake acquisition resulted in shareholders being paid a special dividend of $1.94 a share as others settled for $9.52 per share in cash or a share of the new stock.
“The Terraform Power acquisition is an attractive entry-point for us into the quickly-expanding solar and distributed generation sectors, and its high-quality revenue streams will deliver immediate accretion to our shareholders,” said Brookfield Renewable CEO, Sachin Shah.
Institution Investors Holdings
Brookfield Asset Management is now the largest shareholder in TerraForm Power with a holding of 75.59 million shares representing 51% stake. The firm owned 625,000 Class A common stock and 125, 400 common stock as of the end of June 30, 2017.
The investment is expected to contribute about $40 million to Brookfield Renewable FFO as TERPs cash flow are underpinned by long-term contracts. The company also boasts a portfolio of high-quality assets that have a long useful life remaining.
The company is also set to be a vehicle for acquisitions, for solar and wind operating assets in North Americana and Western Europe.
Vanguard owns 7.33 million shares of TerraForm Power valued at $87.96 million. D.E Shaw & Company owns 6.08 million shares worth $69.83 million.
According to newly appointed Terraform CEO, John Stinebaugh, the company remains well positioned for success given the multiple paths for growth. The company plans to pursue growth organically and through acquisitions thanks to the financial backing of Brookfield Asset Management.
