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The Keephills 3 power plant is a 495-gross-megawatt coal-fired generating facility located about 70 kilometres west of Edmonton.

Last fall, I wrote a column about a little-known company called TransAlta Renewables Inc.. It's a spin-off from TransAlta Corp. (which owns a controlling interest) and was mainly involved in wind-generation projects at the time of that article. I liked it because of the high yield (6.5 per cent at the time) plus the potential for growth both in Canada and abroad.

When I wrote the column, the shares were trading at $11.88. They dropped to as low as $11 in December but have since recovered and closed on May 15 at $12.02, slightly above the original recommended price.

The company reported first-quarter results on May 1 and profits were down slightly from a year ago. Net earnings were $19.65-million ($0.17 per share) compared to $21.13-million ($0.18 per share) in the same period of 2014. However, revenue was up slightly and cash available for distribution per share increased from $0.15 to $0.26.

I think the days of flat returns are over. Going forward, we should see some significant positive movement in RNW's fortunes. On March 23, the company entered into an investment agreement with parent TransAlta Corporation in which TransAlta Renewables agreed to acquire an economic interest in TransAlta's Australian power generation portfolio and Fortescue River gas pipeline. As well, RNW will fund the remaining project costs for the South Hedland gas-fired project, for a combined value of approximately $1.78-billion.

The total portfolio consists of 575 megawatts of power generation from six operating assets and the South Hedland project, which is currently under construction, as well as a recently commissioned 270-kilometre gas pipeline. The deal closed on May 7.

The transaction was financed in part by the issuing of approximately 17.9 million subscription receipts at $12.65 each, which generated gross proceeds of about $226-million. The receipts are exchangeable for one share of common stock.

This has the effect of diluting the holdings of existing shareholders, but the pay-off may be worth it. President Brett Gellner said the investment "will significantly increase the company's scale and cash flow diversification, and allow us to increase the dividend by $0.07 per share, or 9 per cent, once the transaction closes and an expected 6-7 per-cent increase once the South Hedland project is fully commissioned in 2017".

The company confirmed the 9-per-cent increase as part of the announcement of the closing of the deal. The monthly $0.07 dividend takes effect at the end of June, bringing the annual payout to $0.84 for a yield of almost 7 per cent based on the May 15 price.

And it looks like there is more to come. "Going forward, we are well positioned to continue to grow in Australia, acquire other assets from our sponsor and majority owner, TransAlta Corporation, and pursue third party acquisitions," Mr. Gellner said.

There's above-average risk, here but the high yield makes this an attractive choice for investors who are willing to accept that. Ask a financial adviser it TransAlta Renewables is a fit for your portfolio.