Last week was a seriously mixed bag for energy sector fundamentals. The WTI crude oil benchmark tumbled to $56 a barrel, after trading above $70 a few weeks ago. Over the same period natural gas went from $3.00 MMBtu to $4.60.

In recent days, the share values of renewable energy Yieldco stock have also been pulled lower. It seems the market is linking these companies to the plight of California power company Pacific Gas and Electric (NYSE: PGE).

Yieldcos are companies that own renewable power production assets such as wind farms, solar energy facilities, and hydropower production assets. The companies acquire energy producing assets and sell the power to utilities and other end users on long term contracts. They operate as pass-through entities, paying out most of the free cash flow as dividends to investors.

The better Yieldcos look to acquire assets that allow them to grow the dividends. Most have a sponsor company that is either a developer of power production facilities or provides additional financial support for the Yieldco’s growth goals.

Buy These 3 High Yield Clean Energy Stocks While They’re Still Cheap

The prospects of these companies have not changed in the last few days or weeks. Renewables are the growth area of energy production. The Yieldco companies have pipelines of assets in development that allow them to stay on their forecast growth trajectories. If you are an income stock focused investor, now is a good reason to buy low and yield high in the Yieldco group.

TerraForm Power (Nasdaq: TERP) is a $2.3 billion market cap which owns wind and solar power production assets. The company has gone through significant transformation over the last year. In October 2017 Brookfield Asset Management took over sponsorship of TERP and became a 51% shareholder in the Yieldco.

In February 2018, TerraForm made an offer to acquire 100% of Saeta which owned and operated 1,028 megawatts of rate-regulated and contracted solar and wind assets, located primarily in Spain. The $1.2 billion purchase closed in June 2018.

TerraForm’s financial results show the company was coming up short of covering the $0.19 per share dividend for the first two quarters of 2018, building up to 1.15 times coverage. Management has stated a goal of 5% to 8% annual dividend growth going forward, while paying out 80% to 85% of cash available for distributions.

Current yield is 7.0%.

Brookfield Renewable Partners (NYSE: BEP) was operating like a Yieldco long before the term was invented. The company owns 260 hydro power plants, which account for 76% of production. 35% of production is done outside of North America. Also, 90% of power production is purchased on long-term contracts.

BEP owns the 51% of TERP acquired by Brookfield Asset Management. Brookfield Renewable Partners has been publicly traded since 2001 and is the only Yieldco to have an investment grade credit rating.

The company pays out about 70% of CAFD as dividends and has been growing the dividend since 2011. Management guides for 5% to 8% annual dividend growth. Unlike the other Yieldcos discussed here, BEP is a Schedule K-1 reporting company for tax purposes.

The shares currently yield 7.0%.

Clearway Energy (NYSE: CWEN) is another Yieldco that recently went through a change of sponsorship. Clearway was started by utility company NRG Energy (NYSE: NRG).

In the Spring of 2018 the sponsor interests in what was then called NRG Yield Inc. was transferred to Global Infrastructure Partners. CWEN retained the right of first offer on the renewable energy projects in the NRG pipeline.

These projects plus the ability to make outside acquisitions will allow Clearway to be a growth focused Yieldco. The company forecasts 5% to 8% annual distribution growth.

CWEN currently yields 7.8%.

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Source: Investors Alley

“Buy and hope” traders are, understandably, terrified today. Their portfolios are paying nearly nothing in dividends. Don’t you think fat 10% payouts would put them at ease a bit?

The unfortunate situation for our “B&H” friends is that they bought stocks without a plan to generate cash flow from them. They purchased their shares – probably after much of the decade-long run up – and now must hope that this old bull market is not aging in dog years!

A better idea? Demanding big dividends. After all, without cash flow, what is a stock really worth besides what someone will possibly pay us for it tomorrow?

Secure 10% yields are the “rubber duckies” of the investing world. Mr. Market can push them underwater for a period of time, but eventually, they rocket up to the surface.

My Contrarian Income Report subscribers who smartly stayed with Omega Healthcare Investors (OHI) – a big paying REIT – have done much better than their scared low-yield-collecting friends as well as the broader market in general. The year actually started inauspiciously as OHI announced a dividend “freeze.” The stock slipped. But a freeze isn’t the same as a cut – and OHI didn’t cut. Its payout was well covered by its funds from operations (“FFO”).

The misunderstanding would soon be our gain, as the stock yielded 10% (thanks to years of previous dividend hikes). And anytime that OHI has paid double-digits in the past, it marked a major bottom for the stock. So why would this time be any different?

OHI’s Dividend Limits Its Price Downside

Let’s fast forward to see how OHI rallied off its most recent double-digit “yield high” to return a fast 48% including dividends!

How a 10% Yield Leads to Quick 48% Gains

It’s an income investors’ dream – banking 10% yearly payments without having to worry about a pullback for the pricey (and increasingly wobbly) stock market.

Which makes right now a good time to talk about my two favorite strategies for generating current cash flow from the stock market. Because whether stocks go up, down or meander sideways, I always want my money to be working for me – and paying me regularly (preferably 10% or more per year!)

My 10% Yield Play: High Current Yields

Our Contrarian Income Report portfolio pays 7.6% as I write. This is 4X the payout of the broader market. It means a $500,000 portfolio will pay you $38,000 per year.

That’s a lot better than the S&P 500, which would insult us income investors with its measly $9,000 annual check. But even $38,000 is likely less than your local bartender earns per year.

To earn more than $38K we must follow one of these two high yield trails:

• “Chase” higher yields of 10% or more.

Bad idea. I can get you a safe diversified dividend portfolio paying 7.6% today. But I don’t see enough double-digit payers to get us above a 10% average responsibly. (How about OHI, you ask? As its stock price has been bid up, its yield has compressed to a still-generous 7.5%.)

• “Accelerate” dividend growth stocks from 2% payers to 20%+.

This is a special system I’ve developed that allows you to collect “instant dividends” worth 5X, 10X and even 20X more than the yields listed for “first-level investors” on most financial websites. Let me explain.

My 20% Yield Play: The “Dividend Accelerator” for 10X Payouts

The beauty of the Dividend Accelerator is that you can collect “instant income” on every trade. This means you can make exponentially higher returns than what’s possible from just traditional dividends.

Most dividend growth stocks pay low current yields because their stocks are too popular. Investors pay up for their track record and prospects of future growth. But my Dividend Accelerator can fix this yield problem by providing a 3X, 5X or even 10X boost to these payouts.

For example let’s consider utility stocks. If there’s more to this pullback than we’ve seen, then its affinity for utility shares is worth noting. The S&P 500 made its recent high on September 20, but don’t tell that to these pullback-proof issues:

Utility Stocks Act Pullback-Proof

I’ve been down on the utility sector for two years now and have specifically picked on blue chips Duke Energy (DUK)and Southern Company (SO) repeatedly. I don’t have anything against these firms, but I also don’t recommend buying them when their stocks are pricey and their yields are low, as they are today.

But not all utilities are growing so slowly they could be confused with fixed income. There’s a notable exception that leaves these tortoises (and their middling dividends) in the dust.

NextEra Energy (NEE) is the largest developer of renewable energy in North America. The firm has been a fast grower for decades. No wonder it’s increased its dividend for 23 straight years!

And these have been meaningful raises – NextEra has shown up its peers with 149% dividend growth over the last decade (versus just 26% – a fraction of NextEra – for the utility sector’s widely marketed ETF):

Why NEE is the Best Utility to Buy

Thanks to the firm’s most recent payout raise, it now shovels out $1.11 per share per quarter (for 2.6% yearly).

But we can accelerate this payout to 19.5% yearly.

That’s exactly what my Options Income Alert subscribers and I have done together. My readers who sold 10 contracts per trade banked $7,050 in cash payouts without ever having to buy NEE!

$7,050 in Payouts in Just 4 Weeks

We turned NEE into our personal dividend ATM. We simply tapped it anytime I saw a setup that I liked – and then placed the put premiums directly on our pockets.

NEE’s Put Premiums: Weekly Payouts Averaging $1,762.50

These trades were as simple as buying or selling any stock or fund. We simply sold put options on NEE instead of buying or selling the stock itself.

Editor's Note: The stock market is way up – and that’s terrible news for us dividend investors. Yields haven’t been this low in decades! But there are still plenty of great opportunities to secure meaningful income if you know where to look. Brett Owens' latest report reveals how you can easily (and safely) rake in 8%+ dividends and never worry about drawing down your capital again. Click here for full details!

Source: Contrarian Outlook

The midterm elections left the U.S. with the House of Representatives controlled by the Democrats, Republicans tightened their hold on the Senate, and President Trump has the bully pulpit and veto power. That is a formula for real bi-partisan compromise or a government that will have trouble just passing a budget. I will be a skeptic until proven otherwise.

On the stock market front, a deadlocked government means that stocks will be evaluated more on their fundamentals, and not on whether new government policies will help or hurt. It will be a good time to be a dividend focused investor.

Here are three ongoing economic trends and an income stock that is a way to play each trend.

The Federal Reserve Board will continue to increase short term interest rates. The Fed’s primary goal is to keep the economy from overheating and bring on a high level of inflation. Higher rates will also give the Fed the tool of rate cuts to soften the next recession.

Out in the real world, higher interest rates mean that the recent trend of the preference to rent housing vs. buying a house will continue. Among those that rent, 78% of tenants believe that renting is more affordable than owning, up significantly this year.

AvalonBay Communities, Inc. (NYSE: AVB) is a large-cap apartment REIT. The company develops, owns and manages apartment communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California.

As of the end of September Avalon had direct or indirect ownership interest in 290 apartment communities containing 84,490 apartment homes in 12 states and the District of Columbia. Another 34 communities were in development or redevelopment.

For the 2019 third quarter, the company reported same store net operating income growth of 3.1%. Average blended rent growth was 3.2%. These are strong, sustainable numbers.

The AVB dividend has a five-year average annual growth rate of 8.0%. The current yield is 3.3%.

Growing energy production from renewable sources is supported across the political spectrum. Another factor is that the cost of development of wind or solar power facilities has declined to a level where they are competitive with construction of new traditional fuel power plants.

This means that new renewable energy projects do not need government subsidies to compete. Yieldco types of companies are the final owners of many renewable energy projects. These are great income stocks with built in growth prospects.

Clearway Energy (NYSE: CWEN) is a renewable energy Yieldco where the controlling party recently changed. Clearway was founded as NRG Yield by utility company NRG Energy (NYSE: NRG) and the utility developed renewable projects to sell to the Yieldco.

In August 2018 NRG sold its sponsor interest in NRG Yield to Global Infrastructure Partners (GIP), a private investment company that makes equity investments in a range of infrastructure assets. The change of control does not affect Clearways prospects to continue annual 5% to 8% dividend growth.

Current yield is 6.7%.

Renewable energy is growing, but so is U.S. onshore crude oil production. The growth in oil production from the Permian Basin is truly amazing, going from one million barrels per day in 2011 to 3.5 million bpd in 2018 and a forecast 3.9 mbd in 2019. I have seen forecasts of 7 mbd by the middle of the next decade.

The limiting factor to this oil gusher is pipeline take away capacity to refiners and the Gulf Coast export terminals. The region needs over one million barrels per day of new pipeline capacity – which will come on line in late 2019. By then more pipeline capacity will be needed.

Plains All American Pipelines LP (NYSE: PAA) is the largest independent owner of crude oil gathering assets, pipelines and storage terminals. The company just announced its newly commissioned Sunrise Pipeline is transporting 300 to 350 thousand barrels per day of crude oil out of the Permian to the Texas Gulf Coast.

The Plains business model lets it often collect several fees from a barrel of oil. These can be gathering charges, pipeline fees on more than one pipeline, and storage fees.

This MLP has gone through significant restructuring since the energy market crash of 2015-2016 included a pair of distribution reductions. The 2018 third quarter earnings report shows the company is back on a growth trajectory and should start growing dividends in 2019.

PAA currently yields 5.0%.