Ecofin US Renewables (RNEP) dividend yield

[dundas666]

Hi all. I was trying to work out the yield for Ecofin US Renewables Infrastructure Trust (RNEP) but the data was a little confusing.

Hargreaves Lansdown shows a yield of 3% in the 'at a glance' page, but 4.3% on the dividend detail page.

Current share price is $0.88 with a quarterly dividend of 1.4 cents, which makes a yield of 6.36%.

It's a new-ish IT and it looks like they've only paid 3 dividends so far, plus it's the GBP version of RENW, which might explain the different values.

Does anyone own this, and could they confirm the dividend situation?

Many thanks, d6

[DavidM13]

The AIC site agrees with you at 6.2% (as the price has ticked up a bit) https://www.theaic.co.uk/companydata/0P ... /dividends

The factsheet agrees "• Sustainable dividend yield: targeting 5.25-5.75¢ dividend in FY2022"

I imagine HL carry a yield based upon Last completed financial year or some sort of backward looking yield, which then leads to lags in the true yield going forward.

Edit: if you hover over the yield on HL it provides their definitions. So it is a mixture of using old prices in the main page and old dividends on the "at a glance" page.

Moral? Stick with the AIC profile page

[richfool]

I do hold RNEP myself, but haven't yet received my first dividend from them (1.40 cents). I noted that HL showed the yield as: 2.98% but like Dundas666, I was more than a little sceptical about their figure. I noted that the dividend increased to 1.40 cents during the current year and so assumed that the HL figure was looking backwards and was far from accurate. When I last researched the company I think I deduced that c 5% was more accurate looking forwards.

The SP fell back in the last month or so, as the 3 managers actually advising and running the trust in the US resigned and moved somewhere else. So that resultant fall in the SP will have boosted the yield to new buyers. The parent is Ecofin, so am am optimistic that new managers will be found.

This was the article about the loss of the managers:

https://www.theaic.co.uk/aic/news/cityw ... ger-exodus

Ecofin US Renewables reels from fund manager exodus
19 July 2022
Ecofin US Renewables Infrastructure, one of the smaller London-listed funds vying to exploit the energy transition, hit by the resignation of its three fund managers.

Ecofin US Renewables Infrastructure (RNEW ), one of the smallest London-listed funds vying to exploit the energy transition, has been hit by the resignation of its three fund managers.

The £119m investment trust, which was only launched in December 2020, said Jerry Polacek, Matthew Ordway and Prashanth Prakash, who worked for Ecofin Advisors in Leawood, Kansas, had quit yesterday to ‘pursue a new venture’.

With the 5%-yielding income fund fully invested in seven, long-term US solar assets, the board said it had been reassured the portfolio would continued to be run by Ecofin’s dedicated asset management team in Overland Park in Kansas, led by Jason Benson with the support of David Sifford and his private sustainable infrastructure team.

Ed Russell, Ecofin’s senior managing director, would continue to provide overall leadership of the US fund management business.

Analysts, however, were concerned by the exodus, saying the three, who had previously co-founded Energy & Infrastructure Capital, were responsible for deal flow and sourcing the fund’s future investments.

They said RNEW had struggled to achieve scale after the $125m flotation fell short of its $250m target. In May the managers said they were considering investing in two more projects worth $51m, out of a total potential pipeline of $3bn, but the company only subsequently raised $13.1m in a share placing at $1.015, short of its $25m target.

Today the shares eased 1% to $1.02 on a 6% premium to net asset value (NAV). Despite the lack of take-up by investors, performance has been good as energy prices and inflation have soared, pushing up total NAV 20.5% in the past 12 months to give a 25.6% total shareholder return.

[mc2fool]

I imagine HL carry a yield based upon Last completed financial year or some sort of backward looking yield, which then leads to lags in the true yield going forward.

Twelve month trailing yield is, of course, the industry standard. The AIC on the other hand figures yield on the current financial year, which more often than not means guessing at (forecasting/estimating) as yet undeclared future dividends to put into the calculation.

While that may more often than not work out (esp. with ITs that like to pay out reliable dividends), it's not the "true yield going forward", it's just a guess at a forward yield.

Either way, folks should be aware of the difference in the methodology and the rather unique way the AIC has of calculating yield.

[DavidM13]

I imagine HL carry a yield based upon Last completed financial year or some sort of backward looking yield, which then leads to lags in the true yield going forward.

Twelve month trailing yield is, of course, the industry standard. The AIC on the other hand figures yield on the current financial year, which more often than not means guessing at (forecasting/estimating) as yet undeclared future dividends to put into the calculation.

While that may more often than not work out (esp. with ITs that like to pay out reliable dividends), it's not the "true yield going forward", it's just a guess at a forward yield.

Either way, folks should be aware of the difference in the methodology and the rather unique way the AIC has of calculating yield.

Yes, it is good to flag up different methodologies. A problem with the 12m trailing yield, depending on the provider, is it is done on NAV not market price, it sometimes counts too many or not enough dividends within the 12m range (depending on pay out timings) and it is slow to factor in known changes to dividend rates or policies. It also takes rather a long time to reflect true expected yield for new launches. The change of rate seems to be the case here.

It is actually Morningstar who provide the yield to the AIC with the methodology you speak of so it does go to a number of other industry solutions too. In the absence of any more up-to-date and known information their estimate for the future dividend would be the same as the previous years dividend.

By way of example. If a fund paid two dividends last year an interim of 5p and a final of 10p. Then this year they paid an interim of 6p. Morningstar would calculate a yield based upon this 6p and the previous year actual of 10p so 16p in total. They would make no attempt to estimate a different final dividend than the previous years 10p in the absence of any new information. So in many ways its the same as the 12m trailing yield but with flexibility to moderate when there is more recent known information as was the case for Ecofin.

[dundas666]

I added this to my watchlist and it's up around 8% in the last few days.

[richfool]

If it is of any interest to anyone, I received my dividend on RNEP today, as at 26th August.

The rate shown was: £0.011557 per share, which my Xcel spreadsheet tells me equates to: a 'yield on cost' of 1.35%, or current 'yield on value' of: 1.46% for the single quarter. Therefore, if all future quarter's dividends were to be at the same rates, that should equate to a yield of 5.84% pa..

The HL dividend section quotes the dividend in dollars/cents: 1.40 cents per share.

[dundas666]

I can't seem to trade RENP in my Interactive Investor ISA or SIPP account because it says there's no KID or KIDD available.

I can buy RENW though (the US denominated equivalent) but are there any disadvantages to that in an ISA or SIPP?

[richfool]

I can't seem to trade RENP in my Interactive Investor ISA or SIPP account because it says there's no KID or KIDD available.

I can buy RENW though (the US denominated equivalent) but are there any disadvantages to that in an ISA or SIPP?

The ticker is RNEP, not RENP. Note the ticker in the title of the OP was wrong and gets carried forward on subsequent posts' titles. The US version is the RNEW ticker, (not RENW). If you trade the US version, you will be buying in dollars.

Try ringing up Interactive Investors. I have done that with my investment manager before now, and I tell them I read the KIID on HL's website, which in fact is what I do.

I've reported the OP and asked that the ticker be corrected there.

[richfool]

Ectracts from RNEP/RNEW Half Yearly Report:

16 September 2022

ECOFIN U.S. RENEWABLES INFRASTRUCTURE TRUST PLC

(the "Company" or "RNEW")

Half-yearly report for the six months ended 30 June 2022

Objective

The Company's investment objective is to provide Shareholders with an attractive level of current distributions by investing in a diversified portfolio of mixed renewable energy and sustainable infrastructure assets ("Renewable Assets") predominantly located in the U.S. with prospects for modest capital appreciation over the long term.

Investment Manager

On 19 July 2022, the Company announced that portfolio managers Jerry Polacek, Matthew Ordway and Prashanth Prakash had resigned from their roles at Ecofin to pursue a new venture. The Board was very disappointed by these resignations. In an ideal world, we would have had more notice, and, working together with Ecofin, would have been able to effect a smooth transition to a new team. However, this was not possible principally because notice periods in the U.S. are typically much shorter than in the UK.

Since the announcement, the Board's priorities have been to ensure that Ecofin concentrates on:

(i) management of the existing asset portfolio, the ongoing performance of which enabled the Company to declare a dividend for the second quarter of 1.4 cents per share on 28 July 2022, consistent with the dividend yield target for the year ending 31 December 2022 of 5.25 cents - 5.75 cents as set out in the November 2020 IPO prospectus; and

(ii) recruitment of a new leadership team. The Board has stressed to Ecofin's senior management that this needs to happen without delay and has been assured that it is an absolute priority. The Board has been receiving regular updates from Ecofin.

In our view, focusing on these priorities is the best way to protect value for RNEW's shareholders. However, as a Board, we are very conscious of our duties to shareholders and, while we are strong believers in the U.S. renewable energy story and the Company's investment strategy, we are open to exploring all options for the future of RNEW consistent with good governance.

It should be noted that Ecofin has confirmed to the Board that the ongoing management of the existing portfolio is unaffected by the resignations, and the Board will continue to work with Ecofin to ensure that this remains the case going forward. Ed Russell, Senior Managing Director of Ecofin, continues to be responsible for overall leadership of the Ecofin team and the origination group continues to be managed by Jason Benson, Director of Private Renewable Energy. Earlier in the year and prior to the departure of the investment team, Ecofin recruited two new resources dedicated to asset management and project controllership with over 17 years' experience in the energy industry.

Portfolio overview

RNEW's shareholders benefit from a high-quality portfolio of 62 solar and wind assets with a combined capacity of 162 MW across seven states: California, Connecticut, Massachusetts, Minnesota, New Jersey, Texas and Virginia. Since 30 June 2022, the portfolio has expanded further with the closing of three additional assets within the Echo Solar Portfolio at sites in Delaware and Virginia. The new assets are ground mounted solar projects and benefit from long term contracted revenues with investment grade electric utilities. The overall weighted average remaining contract term of the overall portfolio is 16.3 years.

As at 30 June 2022, 90% of the portfolio NAV was represented by operating assets. Further, as at 30 June 2022, 59 assets were in operation and three assets were under construction. Total generation from the Company's assets during the period to 30 June 2022 was 177 GWh, 2% below budget, as strong solar and wind resource during Q2 was offset by low wind resource relative to budget during Q1.

Results

NAV as at 30 June 2022 was 97.3 cents per share compared to 97.6 cents per share as at 31 March 2022 and 98.9 cents per share at 31 December 2021. During the first half of 2022, NAV per share decreased by 1.6% as described further in the Portfolio Valuation section of the Investment Manager's Report, largely due to dividends paid of $3.7 million or 2.8 cents per share.

The valuation of the portfolio at 30 June 2022 is supported by an independent valuation firm, Marshall & Stevens, and is based on an underlying blended weighted average pre-tax discount rate of 7.5%. This reflects a small increase in discount rates as at 30 June 2022 due to expectations of interest rate increases and rising bond yields.

RNEW's profit before tax for the six months to 30 June 2022 was $1.5 million and earnings per share, based on revenue received by way of dividends from the Company's unconsolidated subsidiary, RNEW Holdco LLC ("Holdco") (which indirectly holds RNEW's investments through underlying subsidiaries), were 1.2 cents per share.

Dividends

During the period, the Board declared two quarterly interim dividends of 1.4 cents per share each, in respect of the quarters ended 31 March 2022 and 31 December 2021. These dividends were consistent with the Company's IPO target dividend range of 5.25% to 5.75% per ordinary share referred to above and, on 28 July 2022, after the period end, the Board declared a further interim dividend of 1.4 cents per share for the quarter ended 30 June 2022.

Dividend cover for the twelve months ended 30 June 2022 was 1.0 times. We expect the stability of trailing twelve month dividend cover to be supported by the fact that income generated from the portfolio has historically been and is expected to continue to be higher in Q3 and Q4 due to energy production and cash collection seasonality; in addition, several assets within the portfolio are expected to move from the construction phase to the operational phase.

https://www.investegate.co.uk/ecofin-us-renewables--rnew-/rns/half-year-report/202209160700026620Z/