Atlantica Sustainable Infrastructure plc Ordinary Shares

After reading a few articles and listening to a podcast on the latest Intergovernmental Panel on Climate Change (IPCC) report, I started a new position in $AY today. The IPCC report is pretty grim about the future of our planet. It makes it clear that the devastating impacts of a climate crisis are already occurring and the opportunity to curb terrible outcomes are already slipping through our fingers. The report says that greenhouse gas emissions must peak by 2025 to limit global warming close to 1.5 degrees Celsius as targeted by the Paris Agreement. Mitigating climate change continues to a growing and ever important focus for governments, business, and people. For that reason, I wanted to expand my long term dividend portoflio to include another renewable energy stock, $AY.

$AY or Atlantica is a sustainable infrastructure company with a majority of its business in renewable energy assets (solar, water, and wind). Their portfolio is also complimented with storage, efficient natural gas, and transmission infrastructure assets that helps enable the transition towards a clean energy mix. The company pushes for growth in three ways: organic growth through optimization of their current portfolio, acquiring assets from third parties through the use of their presence and network across the globe, and continued development and construction of new assets. Through their business model, their objective is to pay a consistent and growing dividend to shareholders that is sustainable on a long term basis.

Today, $AY wholly owns 25 assets and also partial ownership of 14 assets in renewable power plants (most solar), natural gas-fired generation plants, electric transmission lines, and water desalination plants. These assets have a weighted average life of just under 38 years and predictable returns given the fact that all of its revenues are contracted or regulated with a weighted average contract life of 15 years. They produce 2,044 MW of aggregate renewable energy, 343 MW of efficient natural gas-fired power generation, 55 MWt of district heating capacity, 1,229 miles of electric lines, and 15.5 M ft3 per day of water desalination. The core of their portfolio is in NA, SA, and EU and they intend to expand it further.

The company's debt levels have come down significantly in the last decade, but they still have a ways to go. In their Q4 presentation, they outlined a projection to reduce scheduled debt by $2 billion in the next five years. Their EBITDA has grown steadily over the last five years and management is predicting an adjusted EBITDA in 2022 ranging from $810-$870 million and a targeted CAFD ranging from $230 million to $250 million. CAFD is cash available for distribution and is essentially how much can be paid in dividends to shareholders. CAFD is stable and predictable due to the long-term lifespan of the assets and the length of revenue producing contracts.

All in all, I feel that the company has a safe and growing dividend, a strong portfolio of renewables across many regions that continue to grow, an improving balance sheet, and a laser-focus on an industry that will only become more and more important to the world as time passes.

Scoreboard Investor

Joey Hirendernath

Dissecting the Markets

$AY - Green Energy Dividend Move

New position in AY

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