Brookfield Asset Management's (BAM 1.24%) buyout of TerraForm Power Inc (TERP) is now complete, and the stock had a strange move higher today. According to Yahoo! Finance, shares are up 37% today, which is technically true based on yesterday's closing price, but it's not quite true for the full value shareholders are holding today.
The buyout offered shareholders a special dividend of $1.94 per share and either $9.52 per share in cash or a share of the new stock. Depending on how investors elected to be paid, Brookfield would prorate the transaction.
As it turned out, Brookfield paid the $1.94 per share dividend, $3.56 in cash for 37.4% of the share value, and 62.6% of the value investors owned in a new share. One share yesterday turned into 0.626 shares and $5.50 in cash today. The stock didn't really pop -- it's just adjusting to the new structure of the company today.
What may be more notable for long-term investors is that TerraForm Power laid out how it sees its future. A dividend of $0.72 per share is targeted for next year on a payout ratio of 80% to 85% of cash available for distribution, and the expected growth rate of dividends long term is only 5% to 8%. That implies a dividend yield of just 5.4% today, which would be among the lowest in the yieldco industry. But this should be one of the more stable yieldcos now that Brookfield is in charge of its operations.