TransAlta Renewables: A Steady 5.5% Yield With Improving Growth

Seeking AlphaDividend Ideas | Utilities  | CanadaTransAlta Renewables: A Steady 5.5% Yield With Improving GrowthNov. 10, 2020 2:19 AM ET|| About: TransAlta Renewables Inc. (TRSWF), Includes: TACby: Trapping ValueTrapping Value Conservative Income PortfolioThe best way to provide income in today's markets while reducing risksSummaryTransAlta Renewables was always so cheap because it was so cheap.
That sentence refers to the company's expensive cost of equity, which prevented growth.
That has changed, and the stock is now in a position to grow its dividends once again.
Some stocks are high-maintenance. You have to constantly keep up with the complex projects and wild leverage that they employ. At the other end are those that deliver steady results and make you check if it actually is a stock or a bond. TransAlta Renewables Inc. (OTC:TRSWF) falls in the latter category. A company that delivers such predictable results that it would have no objections from us if it called itself a bond. We take a look at this one today and tell how this renewable energy investment can provide you with steady dividends.
The Company
TransAlta Renewables does get the bulk of its revenues from renewables, but it is not completely about green energy.

(Source: TransAlta Renewables Q3-2020 Presentation)
While wind, hydro and solar make up 57% of the total cash flow, natural gas does make up the rest. TRSWF sells the story by telling you that natural gas is significantly cleaner than coal and oil, and it is correct about that. The company is now actively making investments only in the pure renewable space, and over time, natural gas percentages should shrink.
One other key thing to notice here is that TRSWF engages in business in three countries: the US, Canada and Australia. That diversification further adds to its appeal.
Contracts For As Far As The Eye Can See
The company has long-term contracts for its facilities, with a weighted contract life of 11... Read more

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