3 Great Fast-Growing, Recession-Proof, High-Yield Blue Chips

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Includes: BEP, NEE, TERP
by: Brad Thomas
Summary

YieldCos are renewable energy utilities structured similar to MLPs, and the best way for high-yield income growth investors to cash in on the bonanza that is renewable energy.

The green energy megatrend is underpinned not so much by politics but economics. Specifically, the rapid decrease in the cost of solar and wind energy over the past decade.

This is why I want to recommend three high-yield yieldCos today, specifically the three I consider the best option for cashing in on the global renewable energy gold rush.

Co-produced with Dividend Sensei.

Like many of you, I’m a huge fan of generous, safe and steadily growing yield, which is why I’m such a fan of hard assets, including REITs, midstream, and yieldCos. YieldCos are renewable energy utilities structured similar to MLPs, and the best way for high-yield income growth investors to cash in on the bonanza that is renewable energy.

The green energy megatrend is underpinned not so much by politics (which are notoriously fickle) but economics. Specifically, the rapid decrease in the cost of solar and wind energy over the past decade.

(Source: NEP investor presentation)

And while it’s true that solar and wind aren't a good baseload source of power, due to the variability of both, battery storage technology has been rapidly declining as well, and between 2010 and 2030 are expected to decline 90%.

(Source: NEP investor presentation)

This means that adding battery storage to solar and wind projects can still result in competitive economics with gas, coal and nuclear, even excluding tax credits which are currently set to expire within a few years.

(Source: NEP investor presentation)

This explains why wind and solar are expected to take significant market share in terms of US power production, with coal and nuclear suffering the most (gas will also gain market share as it replaces most baseload power).

(Source: EIA)

According to the US Energy Information Agency’s most recent long-term forecast, renewable energy is going to be the fastest source of power through 2050, accounting for about 50% of new electrical generating capacity.

And that’s just in the US. Globally similar growth rates (or even faster) are expected, creating a multi-decade growth catalyst that smart income investors can cash in on. But I’m sure you’re thinking “sure, huge growth potential BUT there must be a catch!”

It’s certainly true that there are no risk-free “sure-fire” investments and renewable energy is an industry littered with the shattered dreams of plenty of investors.

(Source: Ycharts)

There's a huge difference between recognizing an undeniable mega trend, and actually profiting from it. The Invesco Solar ETF (TAN) might have seemed like a “sure thing” when Obama was elected in 2008 (the media called solar stocks the “best investments you can buy” at the time). And yet the solar industry, while growing like a weed in the aggregate, also was decimated by oversupply (for panels) that caused numerous solar companies to go bankrupt.

This is why you need to be careful about how you invest in renewables. Huge growth potential isn’t enough, you also need:

  • The right collection of income-producing assets

  • Access to sufficient low-cost capital (to execute on the growth potential)

  • Most importantly a great management team that can adapt to inevitable challenges and risks that are sure to arise in the future

This is why I want to recommend three high-yield yieldCos today, specifically the three I consider the best option for cashing in on the global renewable energy gold rush. These are NextEra Energy Partners (NEP), Brookfield Renewable Partners (BEP) and TerraForm Power (TERP).

Thanks to the expertise sponsorship of NextEra Energy (NEE), the largest producer of renewable energy on earth, and Brookfield Asset Management (BAM), the Berkshire Hathaway (NYSE:BRK.A) (BRK.B) of global hard assets, I’m confident that all three of these high-yield blue-chips can deliver generous, safe and steadily rising dividends/distributions for many years and decades to come (even in a recession).

And that amounts to 12% to 19% CAGR total return potential, which puts all other utilities and the broader market to shame (and that’s not just me, that’s official management total return guidance).

So let’s take a look at why I consider these three the best way for income investors to profit from the rise of clean energy.

(Image Source)

NextEra Energy Partners: The Best YieldCo You Can Own

  • Dividend safety: 3/5

  • Business model: 2/3

  • Management Quality: 3/3

  • Quality Score: 8/11 (Blue-Chip)

The only yieldCo I currently own (I plan to eventually own all three of these) is $10,000 worth of NEP. That’s because it offers the best combination of generous and safe yield, industry-leading growth, and by far the best total return potential.

NEP is managed, sponsored and 60% owned by NextEra Energy (NEE), the largest utility in the world by market cap and the biggest producer of clean power in the world. In 2018 NEE was the fifth-largest investor into renewable energy in America, investing $12 billion into solar and wind projects (plus battery storage).

(Source: Investor presentation)

More specifically, the company’s subsidiary NextEra Energy Resources or NEER did that, as it continued to build out its enormous asset base of clean power projects.

(Source: Investor presentation)

Between 2017 and 2020 NextEra plans to construct about 13 GW of solar and wind projects, and despite putting 2GW of projects into service in 2018, the backlog keeps steadily growing every quarter.

(Source: Investor presentation)

And that’s just the short-term backlog for the next few years. Beyond 2020 NextEra has plans for another 28.4 GW long-term pipeline of projects across the country.

(Source: Investor presentation)

Which is where NEP comes in. YieldCos, like MLPs, are designed as drop-down entities that buy income producing assets from their sponsors (NEP’s IDRs are 25%, as are BEP’s with TERP having no IDRs at all). These are under long-term contracts (Power Purchase Agreements or PPAs) with utilities that provide the steady cash available for distribution or CAFD. CAFD is the REIT equivalent of AFFO and the MLP equivalent of DCF and what funds the distribution (BEP) or dividend (NEP and TERP).

NEP and TERP use 1099 forms and their payouts are taxed like dividends, while BEP uses a K-1 form and its distributions are taxed similar to MLPs (lowers your cost basis and is tax-deferred until you sell).

NEP is one of the biggest yieldCos in the country with 5.3 GW of solar and wind assets yet NEER’s giant backlog (of about 40 GW of planned projects) means that its asset base is likely to grow 700% in the coming years.

(Source: Investor presentation)

That bodes well for NEP’s ability to keep growing its dividend like a weed, 15% per year, or nearly 4% every single quarter since its 2014 IPO. That fast growing rate, delivered like clockwork, is why NEP has dominated its peers, other utilities and the S&P 500 itself.

(Source: Investor presentation)

However, yieldCo investors have probably noticed that things haven’t always gone smoothly for what’s supposed to be a low-risk business model. Liquidity traps have sprung up for many of them (TERP, CWEN, PEGI, AY) and some even went bankrupt (TERP under Sun Edison’s management) or at the very least had to cut their dividends (40% from CWEN after Pacific Gas & Electric went bankrupt).

This is why I’m highlighting only those yieldCos managed by Brookfield and NextEra because these industry giants have a proven track record of being able to put together low-cost financing to keep their sponsored companies growing through troubled times like the industry has seen.

(Source: Investor presentation)

In March 2019 NEP announced the second major deal of the past year, a $900 million deal with Private Equity giant KKR. That was to finance the acquisition of 1.2 GW of new assets that completed replace the $125 million of PCG sourced CAFD (from four assets) that's currently in limbo. Those assets come with PPAs to utilities (without CA style bankruptcy risk) with eight to 23 years remaining.

(Source: Investor Presentation)

And NEP, under NEE’s brilliant management, has no less than eight financing methods (with a ninth in the works) to fund its industry-leading growth. That includes the same project level, non-recourse debt strategy that Brookfield is famous for with all its LPs (like BEP, BIP, BPY/BPR and now TERP).

In the hands of poor management, non-recourse debt can lead to disaster (just ask TERP investors when Sun Edison was running it). In the hands of master capital allocators, with interests closely aligned with retail investors, it leads to safe dividend growth of 15% per year, which NEP expects to continue delivering through at least the end of 2023.

(Source: Investor presentation)

And keep in mind that when NEP first IPOd it issued 12% to 15% CAGR dividend growth guidance through 2020. It keeps pushing back that date, because the amount of assets NEER has to sell it is massive, and management has proven a master of overcoming financing challenges by putting together alternative financing that’s accretive to NEP’s CAFD/unit.

(Source: Investor presentation)

And under the Gordon Dividend Growth Model (relatively effective at forecasting dividend stock total returns since 1954) which both Brookfield and NextEra officially use to estimate future returns (which is why I use it as the basis of my own valuation-adjusted total return model) total returns = yield + long-term dividend/cash flow growth. Which means that, if NEP can keep executing as brilliantly as it has for the past five years, investors can likely look forward to 16+% long-term total returns.

Brookfield Renewable Partners: A High-Yield Blue-Chip With A Decades-Long Growth Runway

  • Dividend safety: 3/5

  • Business model: 2/3

  • Management Quality: 3/3

  • Quality Score: 8/11 (Blue-Chip)

BEP is the world’s oldest and largest yieldCo and is 60% owned and managed by Brookfield Asset Management. BAM is the king of global hard assets, tracing its roots back 120 years and having amassed $365 billion in assets under management.

(Source: corporate profile)

BEP is one of Brookfield’s several LPs, which are structured similar to MLPs but with some important differences.

(Source: corporate profile)

BEP is an LP (uses a K-1 tax form and pays ROC distributions) but its assets are themselves LPs. This double pass through nature means it doesn’t generate UBTI and is thus safe to own in retirement accounts (its IDRs are also capped at 25% instead of 50% like with most dropdown focused MLPs).

BEP is slightly different than NEP in that it doesn’t grow through BAM sponsored dropdowns, but rather from Brookfield sponsored deals, which have allowed it to grow its asset base to $47 billion consisting of 17.4 GW of capacity (880 total assets in 15 countries on four continents), 75% of which is hydropower located on 82 global river systems.

Management’s official goal is to deliver 5% to 9% long-term payout growth and 12% to 15% CAGR total returns. Since its Canadian IPO (in 2001) BEP had delivered 15% total returns which have crushed the market, other utilities and yieldCos (NEP is giving it a run for its money though).

(Source: corporate profile) - Canadian IPO 2001

Like NEP, BEP’s cash flow is under long-term contract, but Brookfield is also global, with assets now on four continents.

(Source: corporate profile)

BEP was part of the Brookfield 2017 sponsored deal that bought TerraForm Power and TerraForm Global, two yieldCos founded by now-bankrupt Sun Edison, the largest solar project builder of its day (growing too fast via debt is dangerous, as plenty of REIT investors can attest to). Today BEP (and thus BAM) manages TERP and TerraForm Global’s Asian solar and wind assets have been folded into BEP.

(Source: investor presentation)

Brookfield’s global reach means it can go after more lucrative opportunities in Asia and Latin American where it can achieve annualized returns on capital far superior to what’s available in the US.

What I like most about Brookfield is that they put capital to work in true Buffett fashion, opportunistically being the financier of last resort, which allows them to acquire quality income producing assets at the best prices. This includes:

  • The 2014 acquisition of Bord Gais’s 660 MW of wind power assets during the European financial crisis (BEP has since added 1.2 GW to the growth backlog of this deal bringing total EU wind organic growth potential to 1.5GW).

  • 2016’s Isagen deal, in which it bought 3 GW of Columbian hydro power (with 3.8 GW growth backlog) in a $5 billion deal with the country’s third-largest power producer when Columbia’s economy was hurt due to falling commodity prices and the Columbian Peso was devalued.

  • 2017 bankruptcy acquisition of TerraForm Power and TerraForm Global, added 3.6GW of wind and solar (plus energy storage) assets in 10 countries acquired at firesale prices.

Brookfield isn’t just an opportunistic investor, however. They are a master operator as well. TerraForm was turned into a Brookfield managed yieldCo with all employees moved into Brookfield offices, senior executives from BAM dispatched to right the ship, and a cost savings plan instituted to save $100 million per year, allowing TERP to once more start paying a safe and growing dividend.

(Source: corporate profile)

According to Brookfield, over the past five years, $1 trillion has been invested into renewable energy worldwide. BEP and BAM’s ability to put together mega deals, and raise hundreds of billions from global investors (both institutional and retail), is going to be needed because the company estimates that its long-term growth runway is $11 trillion in size, and that’s just in the country’s it’s currently in.

(Source: corporate profile)

However, despite having built its empire based on huge Brookfield deals, 5% to 9% long-term payout growth guidance is purely based on achieving 6% to 11% organic cash flow growth.

(Source: corporate profile)

And like NEP, Brookfield, the financial masters of the universe that they are, have elevated the use of non-recourse debt to an art form. 93% of BEP’s debt is long-term fixed rate, and 80% of it is non-recourse (and well staggered to boot with average maturities of 10 years and average interest rate 5.4%). BEP is the only yieldCo with an investment grade credit rating and a very strong BBB+ one at that.

(Source: corporate profile)

And just as NEP has access to many funding sources to execute on its growth potential, so too does Brookfield Renewable. In fact, no yieldCo on earth has access to more low-cost capital than BEP, courtesy of its sponsorship by BAM.

(Source: earnings supplement)

But while huge growth potential is great, what matters most is that BEP’s distribution is safe, courtesy of management’s long-term payout ratio policy of 70% of FFO, providing sufficient retained cash flow to fund its organic growth backlog (what the 5% to 9% distribution growth guidance is based on).

As I explain in the risk section, from time to time the payout ratio will spike due to temporary headwinds (variable power output and in the case of BEP currency effects) but this is where having the financial power of Brookfield behind it is crucial to BEP’s distribution safety and ability to keep delivering 12% to 15% long-term total returns, not just for many years, but for likely decades to come.

TerraForm Power: A High-Yield Green Energy Utility Risen From The Ashes And Now Run By Brookfield

  • Dividend safety: 3/5

  • Business model: 2/3

  • Management Quality: 3/3

  • Quality Score: 8/11 (Blue-Chip)

Thanks to being bought by Brookfield, TERP has risen from the ashes created by its former bankrupt sponsor and is now one of the best yieldCos you can own.

(Source: Simply Safe Dividends)

Under old management, TERP was a mismanaged yield trap that went bankrupt and had to completely suspend its dividend. When Brookfield bought the YieldCo (it now owns 65%) it underwent a spectacular turnaround that had three goals: Improve the profitability of its existing assets, strengthen the debt-laden balance sheet, and restore the yieldCo to growth via BAM backed financing (bonds backstopped by BAM which allowed TERP to obtain much cheaper interest rate loans).

These turnaround efforts included a GE deal to reduce the operating expenses of its North American wind projects by $20 million per year (lower maintenance costs) but also improving power output so they generate $15 million more per year in revenue. Similar deals in Europe and with other North American maintenance operators are expected to save another $6 million per year by the middle of 2019, plus generate $8 million in marginal revenue.

According to new Brookfield installed CEO John Stinebaugh (a Brookfield managing partner with over 20 years of experience in utilities), the total savings from Brookfield’s efficiency program will result in $40 million in marginal CAFD. That doesn’t sound like much. But considering that in 2018 TERP generated $126 million in cash flow, that’s actually a huge number. In fact, as its new CEO explained this is enough cash to:

Cover approximately 75% of the growth required to achieve our 5% to 8% annual dividend-increase target through 2022 with a payout ratio of 80% to 85% of CAFD.

As far as the balance sheet goes, TERP refinanced a wind farm in Q1 (raising $65 million) and is making progress on the third round of securing $350 million in financing as part of the Brookfield led Saeta acquisition. When that debt deal (four rounds) is complete Brookfield will have reduced its debt by $300 million and significantly reduced its borrowing costs, resulting in even more marginal CAFD.

And this is just the latest refinancing Brookfield has put together. Since buying TERP Brookfield has helped it refinance $1.6 billion in debt, extending its maturities and achieving lower interest rates. As a result, TERP’s credit rating has been upgraded from C level deep junk to BB- (and is likely to keep improving to NEP levels in the future). Today 85% of its debt is long term, fixed rate, and non recourse, following the time tested model Brookfield has used at BIP/BEP/BPY/BPRs.

It also will mean TERP’s leverage (debt/cash flow) falls to management’s long-term target range of 4 to 5, which is the safe level for yieldCos (for project level, non-recourse debt).

The Saeta acquisition was TERP’s first acquisition since it went bankrupt, and the $1.2 billion purchase (targeted returns on equity of 10%) of the distressed Spanish utility’s solar and wind assets (which boosted TERP’s capacity by 40%) has set TerraForm up for many years of growth. That’s because management plans to apply the same proven improvement model it used for TERP’s legacy assets.

(Source: investor presentation)

More importantly, it meant that TERP is now a global player, just like BEP, with 3.7 GW of wind and solar assets in five countries on three continents. The cash flow is 95% under long-term contracts with an average duration of 13 years, and 93% of those PPAs are with investment grade utilities.

(Source: investor presentation)

Here are the financial results of Brookfield's transformation of TERP.

(Source: Motley Fool)

TERP is now the fastest-growing yieldCo in America. While the payout ratio isn’t yet at the long-term target of 80% to 85% (95% in Q1) the company is well on its way.

(Source: investor presentation)

TERP’s efficiency initiatives alone, once completed would give it a payout ratio of 76% for the current dividend.

IR Chief Chad Greene explained at the Q1 conference call that achieving TERP’s plan for 5% to 8% annual dividend growth and a safe 80% to 85% payout ratio will require just $180 million in additional acquisitions. Which the yieldCo plans to fund entirely via a self-funding business model.

These investments should be fundable through internally-generated cash flow. As a result, TerraForm Power should not need to issue any debt or equity capital to meet its growth target over the next four years."

(Source: investor presentation)

And Brookfield managed TERP already has found the very investments it needs to achieve that five-year growth plan, which again, is going to be entirely selffunded (so very low execution risk). Should the yieldCo decide to make opportunistic Brookfield-sourced deals it has $1 billion in liquidity available under its new and improved revolving credit facility (LIBOR +2%).

(Source: investor presentation)

And of course, as with all Brookfield managed stocks, that dividend growth rate is based on organic growth opportunities only. BAM sponsored opportunistic deals, for which its management also will line up the funding, represents potential upside to the already industry-leading payout growth guidance.

Basically, TERP, now managed by Brookfield, has gone from one of the worst yieldCos in America to one of the best. That 6% yield plus 5% to 8% annual payout growth means that TERP, like all of Brookfield’s pass-through entities, will likely be capable of generating 12% to 15% long-term total returns. And given the massive global scale of solar and wind growth in the future, those total returns are likely to be sustained for decades to come.

Risks To Consider

While the growth potential of clean energy is obvious, it’s also important to understand the risks that could derail the strong growth potential of any yieldCo and thus why I’m highlighting the best managed three in the industry. Overcoming these challenges is going to be crucial to achieving management’s ambitious growth guidance and those great total returns.

It’s no secret that renewable energy isn’t as stable as coal, gas or nuclear. The wind, while generally stable over time in major areas, can be rather volatile in the short term.

(Source: NEP investor presentation)

Solar as well is seasonal, with the length of day meaning that summer is the time of peak power generation and cash flow (and clouds can add even more variability). Similarly, droughts can cause hydro power to dip for prolonged periods of time, something BEP has had to deal with in recent years.

Then there’s regulatory uncertainty surrounding tax credits in the US.

(Source: NEP investor presentation)

Tax equity funding has been a major funding source for yieldCos in the past, but as things now stand, by 2023 the industry will need to find alternative funding to keep growing.

(Source: NEP investor presentation)

While the economics of solar and wind are expected to stand on their own by 2023, there's also a risk created by the rapid decrease in solar and wind prices. Specifically, that once PPAs expire they need to be renegotiated at market rates. As the PCG bankruptcy is showing, this is typically at much lower (up to 50%) rates which can have significant negative effects on yieldCo CAFD.

A diversified asset mix, with well staggered PPA maturities, can help smooth out cash flow over time, but ultimately the best defense against inevitable lower PPA resets is growth. A yieldCo must grow its asset base enough to ensure that when leases expire and new ones are signed at lower rates, CAFD/unit/share keeps rising allowing for the steady payout growth that is at the heart of this industry’s investment thesis.

But that brings me to the final and potentially biggest risk of all to the bullish thesis of these three stocks (and the entire industry)

YieldCos were created after the Great Recession and thus have yet to be tested by tighter credit conditions which occur (as seen by rising bond spreads) during economic downturns and bear markets.

BEP has a BBB+ credit rating, which means it faces the smallest risk of credit disruption, but NEP and TERP are junk bond rated (as are all yieldCos other than BEP). Now it’s important to remember that junk bond ratings don’t necessarily mean a company is low quality (Netflix (NASDAQ:NFLX) is a junk bond-rated company).

However, junk bond-rated firms will naturally face higher challenges access credit markets when they become spooked about negative economic growth. Which is why it’s essential that conservative income investors own yieldCos with strong sponsors like NextEra and Brookfield, both of that can provide financial backstops (as BAM already has done with TERP to get it through its liquidity trap) and put together flexible financing deals to keep the growth train chugging along.

What's the risk of a recession coming soon and disrupting the credit markets? Well, Morgan Stanley has put the US on “recession watch” and that’s not just because of the escalating trade wars we find ourselves in.

Morgan used April economic data and its adjusted-yield curve (which factors out Fed bond buying through 2013) to conclude that even without rising tariffs the US might face a recession in 2020.

The Cleveland Fed’s recession risk model estimated that in most of May the risk of a recession beginning in the next 12 months was about 35%. But that was with the yield curve averaging -1 basis points.

Today the curve is -24 basis points, meaning recession risk is even higher (and at levels that have historically meant a downturn was a year away). The good news is that the curve has been relatively stable at -20 to -28 bp over the past week. This indicates that the bond market believes that a recession is only likely if the Fed doesn’t cut rates. But a 50+ basis point reduction in the Fed Fund rate is likely to un-invert the curve and basically means the bond market thinks the Fed can still save us from a recession.

However, we can’t forget that the Fed is a slow-moving institution that, with the exception of 1998 (yield curve inverted due to the Asian Financial Crisis) has never cut rates fast enough to head off a recession.

The bottom line is that while the yieldCo business model is essentially low risk (renewable energy utilities) no investor should make the mistake of assuming that these stocks are going to be as defensive as normal utilities.

(Source:Ycharts)

Regulated utilities tend to have betas of 0.05 to 0.35. While they generally still decline during corrections and bear markets they fall a lot less than the S&P 500. In contrast yieldCo betas, while still lower than most stocks, are much higher, which means that declines during periods of market panic will be greater.

(Source: Ycharts)

Here’s a chart of the total returns of these yieldCos, along with the S&P 500 and three popular regulated utilities. As you can see the utilities actually managed to deliver flat to slightly positive returns during the late 2018 correction, the most severe in a decade. In contrast, the yieldCos either matched the market downwards or outperformed by falling less.

Note that during a recessionary bear market, where stocks fall on average 30% (excluding the historical anomalies of the tech crash and Financial Crisis) even utilities will decline, but typically much less than the S&P 500. But this brings me to the crucial issue of proper risk management.

Great long-term investing begins with the right asset allocation (mix of stocks/bonds/cash) that allows you to weather the market’s inevitable downturns.

(Source: Ycharts)

No dividend stock is a bond alternative, because almost all equities will fall during times of market fear. Bonds are what you need to own to have stable or appreciating assets to sell to meet expenses during periods when stocks tank (like retirees on the 4% rule).

Here’s how three popular bond ETFs, of varying maturity duration, did during the late 2018 correction. And here’s how cash (t-bills) and 10-year Treasuries (long bonds) did during the last three recessions.

While it’s sexy to pick stocks, good long-term returns start with the right asset allocation for your individual needs and only then select the proper equities for that part of your portfolio. And even if you select the right stocks (or ETFs if you aren’t an active investor) you still need to make sure to diversify properly using the right sector and holding limits to avoid a failed blue chip blowing up your portfolio.

I personally use 25% sector caps (I like to overweight MLPs and REITs) and 5% position limits (a long-term goal I’m working towards). But everyone’s risk management rules will be different depending on your goals/time horizons and risk tolerance.

But the point is you need to make sure your portfolio has both the right asset allocation (otherwise high volatility will cause you to panic sell into a crash) and enough diversification to let you sleep at night if the investment thesis of one of your holdings breaks.

Because as even Peter Lynch, the second best investor in history behind Buffett, reminds us “in this business if you’re good you’re right six times out of ten.” And we can’t forget that crappy companies like General Electric (GE) and CenturyLink (CTL) used to be dividend aristocrats. This highlights the fact that even the bluest of blue chips can fail which is why you need to make sure to always use the right risk management for your needs.

Bottom Line: NEP, BEP, and TERP Are My Top 3 YieldCo Recommendations For Uncertain Times Like These

Don’t get me wrong, there are no perfect stocks, and as the risk section makes clear, there are plenty of things that could derail the hyper-growth potential of any yieldCo. But this is why I’m not just highlighting any yieldCos, but the ones with the hands-down most proven management teams in the industry, NextEra Energy and Brookfield Asset Management.

While the overall business model may be dead simple, like all things in business, the devil is in the details. The Pacific Gas & Electric bankruptcy threw the entire industry for a major loop, and over the long term, it will take masterful capital allocation strategies to put together a combination of creative financing to get all the necessary solar, wind and hydro projects we need built.

But the same complexity and risk that might trip up other YieldCos also is a competitive advantage for these three. Because with Brookfield and NextEra guiding them through the exciting but choppy waters that is the booming green energy industry, all three of these YieldCos have been able to deliver what income investors crave - safe and steadily growing yields.

While a recession might be coming in 2020 or 2021, which might make financing growth projects harder, I’m confident that the world-class management teams at NEP, BEP, and TERP will find a way through those potentially troubled times, which will pay off handsomely for long-term income investors.

Author's note: Brad Thomas is a Wall Street writer, and that means he's not always right with his predictions or recommendations. Since that also applies to his grammar, please excuse any typos you may find. Also, this article is free, and the sole purpose for writing it is to assist with research, while also providing a forum for second-level thinking.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.