Funds eye spinoffs of alternative energy companies

New York

THE hunt for dividend yield is pushing US fund managers into an unproven new offshoot of the alternative energy industry.

Yield companies - commonly called "yieldcos" - are spinoffs of alternative energy companies that own assets such as wind or solar farms and pay investors dividends out of the cash flow generated by long-term contracts to sell power to utility companies. Though many investors have never heard the term, yieldcos are popping up in the portfolios of some of the most widely-held mutual funds in the US.