Yieldcos: Alternative-Energy Stocks for Dividend Investors

Yieldcos, which operate wind, solar and other power-generation facilities, spin off most of their steady earnings to shareholders.

Renewable-energy investing has long been the domain of growth-oriented investors who have the stomach for the industry's ups and downs. But a new breed of income-producing alternative-energy stocks is designed to appeal to more conservative dividend investors.

"Yieldcos" operate wind, solar and other power-generation facilities whose customers enter into long-term purchase contracts. Those contracts provide steady revenues and allow the yieldcos to distribute most earnings to shareholders. "The yieldcos are becoming in some sense the utilities of the future," says Robert Muir, senior vice-president at Green Alpha Advisors, in Boulder, Colo. "They're solid dividend payers."

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Eleanor Laise
Senior Editor, Kiplinger's Retirement Report
Laise covers retirement issues ranging from income investing and pension plans to long-term care and estate planning. She joined Kiplinger in 2011 from the Wall Street Journal, where as a staff reporter she covered mutual funds, retirement plans and other personal finance topics. Laise was previously a senior writer at SmartMoney magazine. She started her journalism career at Bloomberg Personal Finance magazine and holds a BA in English from Columbia University.