Saeta Yield’s Acquisitions Increase Its Implicit Dividend Yield

Saeta Yieldco increases dividendSaeta Yieldco's trading

ACS’ renewable energy subsidiary, Saeta Yield, plans to increase its dividend by 1% to 0,76 euros per share in 2017 compared with a year earlier. The company explained in a statement that the acquisition of the Carapé wind farms in Uruguay and the refinancing of the debt related to the thermal energy plant Manchasol 2 (in Ciudad Real, Spain) will allow it to raise its dividend.

This improvement is due to favourable outlook regarding the company’s recurrent cash flow, which has grown to 73,1 million euros,” Saeta Yield said. It added that the dividends will have to be approved by its board on a quarterly basis.

On the one hand, the Manchasol 2 refinancing operation will increase the firm’s annual recurrent cash flow by 4,6 million euros, thanks to the decline in debt financing costs and the extension of the maturity date. This operation has generated between 10 and 20 million euros present net value for the company, without any contribution from its own funds. The new financing contract consists of two elements: one is for 159 million euros with a syndicate of 5 banks, while the other is for 40 million euros with an institutional investor.

And on the other, the purchase of Carapé will increase cash flow by 8,2 million euros, before the financial costs of the transaction. The company highlighted that it “makes our medium and long-term dividend policy more consistent, as well as increasing our room for manoeuvre to improve shareholder remuneration in the future.”

According to analysts at Link Securities, this news represents the continuation of Saeta Yield’s Strategic Plan. They flag that the company, which offers high recurrent cash flow generation, guarantees an annual dividend yield of over 8% for the coming years at current stock market prices.

 Saeta Yield is one of our favourite so-called defensive stocks. There is a lot of visibility in its results, it has a high level of recurrent cash flow generation and an attractive dividend policy. In addition to all that, it has strong earnings growth expectations.