Energy Yields

Some investors are less concerned about finding stocks that offer cheap growth than in finding reliable sources of income.  A ranking of the public companies in the Crystal Equity Research alternative energy indices found three stocks with enticing current yields.

The Atomics  -  Power Generation

SCANA Corporation (SCG:  NYSE) is a regulated electric utility with a diversified portfolio of nuclear, solar, natural gas, hydroelectric, biomass and coal power generation assets.  The company services over a million retail customers in the Carolina’s and Georgia with electricity and natural gas.  In the twelve months ending March 2018, the company generated $4.4 billion in total sales, from which it turned 21.6% into operating cash flow. 

Strong cash flow helps preserve a generous dividend payout policy.  The annual dividend expected over the next year is $2.45, providing a yield of 7.1%  at the current price level.

Mothers of Invention  -  Emissions Controls

The forward dividend yield is 9.0% for Advanced Emissions Solutions (ADES:  Nasdaq).  Next year’s dividend of $1.00 is expected to be paid from sales of the company’s M-Prove technology that is used as an alternative to halogen-based chemicals to remove mercury emissions from combustion streams.  The company also sells a liquid chemical additive called RESPond to power plants using electrostatic precipitators and CyClean technology for pre-combustion treatment of coal to reduce nitrogen oxide and mercury emissions. 

The company has not yet achieved sufficient scale to find profits in these products.  Thus it is the company’s investments in Tinuum Group and Tinuum Services that pays its bills.  Tinuum is a coal technology provider focused on reducing toxic emissions from coal-burning power plants while the world’s economies make the transition to renewable energy sources.  Tinuum offers pre-combustion coal additive technologies and designs improved boiler operations.  

Beach Boys  -  Waste-to-Energy

Covanta (CVA:  NYSE) is among the most successful waste-to-energy companies in the U.S.  Historically, a waste collection company, Covanta has shifted its business model to turn its waste pickups into valuable feedstock for electricity generation.  It operates over forty-five energy generation facilities that are capable of converting over 20 million tons of waste into electricity and recycling over a half million tons of metal annually.  The company recent invested in waste-to-energy operations in Dublin, Ireland.

In 2017, the company translated 14% of sales to operating cash flow.  Strong sales-to-cash conversion helps support the company’s international expansion as well as the dividend.  The company has guided for a dividend of $1.00 over the next year, implying a forward dividend yield is 6.7% at the current stock price.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.