Recent Sell – Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)
With only a few days left until the new year, I honestly thought I was done making moves on my portfolio until then. As your investments grow and you start accumulating more stocks or add new companies, it takes longer and is harder to maintain upkeep on it. While we ideally like to hold stock in quality companies for the long term, this isn’t always the case. From time to time a stock may become volatile or will no longer fit into your portfolio.
A few weeks ago I posted about optimizing my portfolio. For the past month or so, I have been reviewing my portfolio and deciding in which direction I want to take it. Attempting to keep only the companies I foresee as being long term holds while keeping up with my goals of diversification.
Just as I thought I was completed with my review, I noticed something I had missed. I own shares of Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) which is an REIT. They are a fairly new IPO in the past few years so for those of you who have never heard of them let me reiterate the MarketWatch.com description of the company. “Provides debt and equity financing for sustainable infrastructure projects that increase energy efficiency, provide cleaner energy sources, positively impact the environment or make more efficient use of natural resources.”
I love this idea! Even though this company has only been public since 2013, I know it was something I could get behind. I was fortunate enough to pick it up right after the market started picking up after 2015’s downturn. From my purchase date in March at about $19 a share, it steadily rose to near $25 by September for a $5.88 per share increase or 33%. With a 6% dividend yield that keeps increasing, nothing can stop me now.
I know what you are thinking, “If it’s so great, then why did you sell it?.” Good question, and there are a few factors that play into this decision. Since September, the stock has been decreasing ever since. About $6 a share or around 25%. With newly elected Trump at the helm and his stand on energy and resources, this may play a factor in the decreasing stock price. This doesn’t bother me since I would like to hold onto it for a while. The cheaper price means more potential buying opportunities.
That being said, the dividend yield is a bit high which may show more risk and volatility. With the share price dropping and it’s dividend yield still increasing, the yield today is just over 7%. Further investigation lead me to finally see what I had overlooked before. The payout ratio for HASI is 137.5%! Now REIT’s are known for having higher yields and payout ratios because they are required to give most of their profit to shareholders in order to get the tax benefits of being an REIT. However, with a payout ratio that high and continuing dividend increases, I fear the dividend cut will be coming soon.
So for the time being, I have sold all my shares of HASI. Hopefully in time, I can revisit them or find a similar company to invest in. What are your thoughts? What do you think of HASI? Was it smart to sell? Do you know of any similar companies?