“Yieldco renewable portfolios are not sensitive to commodity pricing and will generate stable cash flows, which should allow most companies to meet their growth targets. However, we believe that some management teams may ultimately cut dividend growth targets despite having substantial liquidity. Since equity markets clearly are not rewarding, or not believing in the sustainability of guided dividend growth, retaining higher levels of cash and utilizing it for attractive acquisitions at the bottom of the market may ultimately prove to be a better strategy,” said Citigroup analyst Sophi Karp in a note posted by Amey Stone of Barron’s.
As for as YLCO goes, Karp lowered her price target on Abengoa Yield (NYSE: ABY), one YLCO’s top 10 holdings. However, the analyst kept bullish views on three YLCO holdings that combine for about 12% of the ETF’s weight.
Global X YieldCo Index ETF