Atlantica Sustainable Infrastructure (formerly Atlantica Yield) AY is a long-term holding that has had a particularly rough 2023 - down almost 33% YTD, Maybe I’m wrong, but I think the price drop can be attributed to two items
- Problems encountered by their backer, Algonquin Power & Utilities (AQN), who own a decent chunk of AY (about 40%) and partially share a common business line - renewable energy projects. AQN is also a regulated utility.
- Sustainability of the dividend/distribution. The ~10% yield is really high, but that’s only because the share price has fallen so sharply.
AY announced their Q3 2023 results earlier this week. During the earnings call, the company CEO took the unusual step of spending the first few minutes discussing the renewable energy market, and why AY was positioned differently.
AY does have some wind energy related projects. However, unlike the problems being encountered by the East Coast offshore wind projects, all of AY’s wind projects (4 in the US, 3 in Uruguay) are land based, and are already in production. 70% of their projects (31 of 44 projects) have Power Purchase Agreements with at least 10 years remaining.
Having owned AY a few years, I know that a portion of the dividend is a return-of-capital. While this causes more challenges during tax filing, it is not as big a hassle as dealing with an MLP with assets in 10 - 20 states.