Utilities - Generation Industry US

By pjain      Published July 9, 2020, 1:26 a.m. in blog Invest   

Regulated Large Power Utilities with Retail Customers

EXC M=46b y3%

  • It is MATURE - as its territories are mature - SO LITTLE GROWTH

  • Key service areas that include areas around Chicago, Philadelphia and Washington, D.C.

  • Focus on key urban centers provides a consistent baseline of demand

DUK M=63b y4.2% 14yrs or rise

  • UP huge - rising 15% in 2019, thanks to investor optimism over its spending on grid modernization, pipeline expansion and investment in renewable energy.

  • Scale and Stability

  • Massive service area that covers 7.2 million customers from Florida to the Midwest, as well as smaller operations in Latin America and Canada

FE M20b 4%

FirstEnergy may be a stock that doesn't sit well with some income investors, since the company cut its dividend in 2014 to provide a more sustainable structure going forward. However, late last year FE raised the payout for the first time since that reduction – a good sign of things to come. FirstEnergy serves about 6 million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York. It may not be as big as other utility stocks on this list, but given its reach across geographies and its significant market cap of $20 billion or so, FirstEnergy remains a solid income investment despite its checkered past.

Gas Utility

D M60b y4.7% - High Debt - sold $10m pipeline to Buffet

  • HURT by 2018Q1 merger with a South Carolina utility : hit plenty of questions from regulators, consumers and investors.
  • 2019, deal finalized - all the red tape behind - to implement cost savings to benefit shareholder
  • 2020 July - High Debt - sold $10m pipeline to Buffet

Operations across the Mid-Atlantic region – and continue stability for its dividend, too.

OKE - gas y5.2%

Competitive Power Utilities with Industrial Customers

While many income investors first think of the largest electric utilities as ways to access low-risk dividends, natural gas giant Oneok also has a lot to offer. Headquartered in Oklahoma with operations in 14 states across the Midwest, OKE is a great example of finding yield outside the conventional offerings.

  • Don't confuse OKE stock with its subsidiary Oneok Partners (OKS), a midstream energy pipeline business. Both have robust dividend yields, but the partnership does not serve retail customers.

APU - propane y12.7%

AmeriGas Partners (APU)

  • AmeriGas is one of the largest propane distributors in the U.S. That includes tanks for grills as well as residential use for heating and even agricultural to fuel irrigation systems.
  • Pennsylvania-based stock covers all 50 states in some form through a massive network of 1,900 distribution facilities.
  • Its large scale adds up to reliable revenue, and since APU is structured as a profit-sharing partnership, that also means reliable dividends.

Other International

NGG M$38b y5.7% - DIRTY UK/US

National Grid is a multinational utility, with operations based in the U.K. and a footprint in the American Northeast - This gives an interesting layer of geographic diversification to what is already a fairly low-risk investment thanks to strong baseline demand in both the U.S. and U.K.

  • 2007 acquisition of KeySpan in Massachusetts, New Hampshire, New York and Rhode Island.

AES M=$12b y3.2%

AES is ocated in Virginia, but provides power generation services across 16 different countries from Europe to South America and Asia.

  • Shares have sharply risen since early 2016, roughly doubling compared with about 30 percent gains for the broader S&P 500 in the same period.
  • Generous with dividends - has grown its dividend roughly three times since 2014.
  • Current yield: 3.2 percent

Latin and Central American Utilities

ELP Brazil, M$2b y3.2%

  • High Growth opportunity to expand and thrive as it is in a dynamic emerging market that likely will see increased consumer and industrial demand.

  • HIGH RISK: Shares follow an irregular dividend cycle instead of paying quarterly like U.S. utilities.

  • Companhia Paranaense de Energia – or COPEL Brazil-based electricity provider

  • $2 billion in market value

  • books more than $4 billion in annual revenue.


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