• TerraForm Power operates wind and solar assets in North America and Western Europe.
• The company has margin enhancement initiatives to improve its bottom line.
• TerraForm plans to grow its dividend by about 5%-8% annually and currently pays a 5.6%-yielding dividend.

Investment Thesis

TerraForm Power (TERP) delivered a good quarter with top and bottom lines growth. The company has margin enhancement initiatives to grow its bottom line. It also has several wind repowering projects to grow its revenue and EBITDA. With a better balance sheet, the company is in a good position to grow its business through project developments and acquisitions. TerraForm currently pays an attractive 5.6%-yielding dividend and has set a goal to grow its dividend by 5%-8% annually in the next few years. We believe this is a company for income investors seeking a stable and predictable dividend.

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Recent Developments: Q1 2019 Highlights

TerraForm reported its Q1 2019 earnings with improving results. As can be seen from the table below, its total power generation increased significantly to 2,399 GWh in Q1 2019 from 1,834 GWh in Q1 2018 primarily due to its Saeta acquisition. Its cash available for distribution of $44 million was much better than last year's $23 million. Besides the contribution from the Saeta acquisition, the increase in CAFD also reflects the positive impact of its margin enhancement initiatives.