Hannon Armstrong Declines To Raise Dividend, Sets 3 Year Guidance

HASI will likely be better prepared for rising rates than most other REITs and Yieldcos, and should be able to profit from the fact that it has locked in the interest rate on 91% of its debt as rates rise and present increasingly attractive investment opportunities.

With this preparation, we can expect that the company will hit its new guidance for the next 3 years. If it does, the company will pay $1.32 in 2018 dividends, followed by $1.35 to $1.40 in 2019, $1.38 to $1.48 in 2020, and $1.41 to $1.57 in 2021.

At the low end of the range, we can expect investors to demand something 8% yield to hold a company that is growing only 2% a year, or a 6% yield to own a company that is growing 6% a year. That gives a target price of $17.62 to $26.17 in early 2021.

Starting at today’s $18.50 price, the current worst case total return over 3 years is 17%, or 5.5% per year. The upper end of the guidance range gives a three year total return of 64%, or 18% on an annual basis. Given the company’s current defensive stance, I expect most surprises to be to the upside, so $18.50 seems like a good price.


While I have been reducing my allocation to Hannon Armstong over the last six months (see here, and here), I have begun moving cautiously back in with today’s decline.  I do not expect the stock to bounce back quickly, however, so readers looking to add to their positions may benefit by waiting a week or two for an even better buying opportunity.

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Disclosure: Long HASI, short HASI puts.

Disclaimer: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current ...

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David Reynolds 2 years ago Member's comment

Your making the right moves with $HASI.

Tom Konrad 2 years ago Author's comment

So far, so good.