Baird Praises Hannon Armstrong's Pipeline, Confident In Dividend Growth

Citing continued execution and growth, Baird has raised its price target for Hannon Armstrong Sustnbl Infrstr Cap Inc HASI from $24 to $27 and maintains an Outperform rating.

Justification

Baird analyst Ben Kaillo said the company's recent capital raise supports for his bullish coverage on the stock. The capital raise will allow for additional investments that utilize Hannon's ~$2.5 billion near-term pipeline, according to Kaillo.

“We believe continued government spending on energy efficiency projects and long-term growth in the U.S. solar and wind markets should add additional opportunities for 2017/2018,” added Kaillo.

Related Link: Hannon Armstrong Has A Clear Runway To Earnings Growth

The company's dividend yield of 5.2 percent further reinforces Baird’s Outperform rating. “HASI offers a strong dividend yield with lower-risk investments compared to other renewable yield companies,” Kaillo said.

Looking Forward

Baird also sees the company as positioned to perform well in a rising interest rate environment, with a 70 percent fixed rate debt and expected “to utilize more debt financing to move towards its target debt to equity ratio of 2.5:1 by the end of 2016.”

With a market cap currently sitting at $998 million, Baird sees the $1 billion milestone as a possible catalyst to attract additional investors.

At time of publication, Hannon was down 1.01 percent on Friday, trading at $23.54.

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