Shares of First Solar Inc. and SunPower Corp. shot higher Tuesday, a day after the solar companies announced they will form an "yieldco," a subsidiary that bundles power plants and other assets and pays out much of its cash flow to shareholders. Having two companies involved will be "clearly better than one" for investors, analysts at Credit Suisse said in a note Tuesday. There will be two funnels adding to project backlogs, home and utility-scale market presence, and diversification in terms of solar technology. "This should result in a lower yield, all else equal, allowing faster dividend per share growth," Credit Suisse said. Yieldcos, which are publicly traded, get their revenues from long-term, stable power purchase agreements with utilities.
Copyright © 2015 MarketWatch, Inc.
Continue Reading Below