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>>> Update: New solar flare, secondary peak today in this "Extreme" solar storm
By Eric Ralls
Earth.com
May 12, 2024
https://www.earth.com/news/secondary-peak-extreme-geomagnetic-solar-storm-expected-today/
The Sun released another powerful burst of energy today, known as a solar flare, reaching its peak intensity at 12:26 p.m. Eastern Time. The flare originated from a region on the Sun’s surface called sunspot Region 3664, which has been quite active lately.
NASA’s Solar Dynamics Observatory, a spacecraft that keeps a constant eye on our nearest star, was able to capture a striking image of this latest solar outburst.
Solar flares are immense explosions on the Sun that send energy, light and high speed particles into space. They occur when the magnetic fields in and around the Sun reconnect, releasing huge amounts of stored magnetic energy. Flares are our solar system’s most powerful explosive events.
The NOAA’s Space Weather Prediction Center (SWPC) has extended the Geomagnetic Storm Warning until the afternoon of May 13, 2024.
Understanding different classes of solar flares
Today’s flare was classified as an X1.0 flare. Solar flares are categorized into classes based on their strength, with X-class flares being the most intense. The number provides additional information about the flare’s strength within that class. An X1 flare is ten times more powerful than an M1 flare.
These energetic solar eruptions can significantly impact Earth’s upper atmosphere and near-Earth space environment. Strong flares can disrupt high-frequency radio communications and GPS navigation signals. The particle radiation and X-rays from flares can also pose potential risks to astronauts in space.
Additionally, the magnetic disturbances from flares, if particularly strong, have the ability to affect electric power grids on Earth, sometimes causing long-lasting blackouts.
However, power grid problems are more commonly caused by coronal mass ejections (CMEs), another type of powerful solar eruption often associated with strong flares.
Scientists are always on alert, monitoring the Sun for these explosive events so that any potential impacts can be anticipated and prepared for. NASA’s Solar Dynamics Observatory, along with several other spacecraft, help provide this early warning system.
Stay tuned to Earth.com and the Space Weather Prediction Center (SWPC) for updates.
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Update — May 12, 2024 at 9:41 AM EDT
The ongoing geomagnetic storm is expected to intensify later today, Sunday, May 12, 2024. Several intense Coronal Mass Ejections (CMEs), traveling from the Sun at speeds up to 1,200 miles per second, are anticipated to reach the Earth’s outer atmosphere by late afternoon.
Over the past two days, preliminary reports have surfaced regarding power grid irregularities, degradation of high-frequency communications, GPS outages, and satellite navigation issues. These disruptions are likely to persist as the geomagnetic storm strengthens.
Auroras visible across the continental United States
Weather permitting, auroras will be visible again tonight over most of the continental United States. This spectacular display of lights is a direct result of the ongoing geomagnetic storm.
The threat of additional strong solar flares and CMEs, which ultimately result in spectacular aurora displays, will persist until the large and magnetically complex sunspot cluster, NOAA Region 3664, rotates out of view of the Earth. This is expected to occur by Tuesday, May 14, 2024.
Solar activity remains at moderate to high levels
Solar activity has been at moderate levels over the past 24 hours. Region 3664 produced an M8.8/2b flare, the strongest of the period, on May 11 at 15:25 UTC. A CME signature was observed, but an Earth-directed component is not suspected.
Solar activity is expected to remain at high levels from May 12-14, with M-class and X-class flares anticipated, primarily due to the flare potential of Region 3664.
Energetic particle flux and solar wind enhancements
The greater than 10 MeV proton flux reached minor to moderate storm levels on May 10. Additional proton enhancements are likely on May 13-14 due to the flare potential and location of Region 3664.
The solar wind environment has been strongly enhanced due to continued CME activity. Solar wind speeds reached a peak of around 620 miles/second on May 12 at 00:55 UTC.
A strongly enhanced solar wind environment and continued CME influences are expected to persist on May 12-13, and begin to wane by May 14.
Geomagnetic field reaches G4 “Severe” storm levels
The geomagnetic field reached G4 (Severe) geomagnetic storm levels in the past 24 hours due to continued CME activity.
Periods of G3 (Strong) geomagnetic storms are likely, with isolated G4 levels possible, on May 12. Periods of G1-G3 (Minor-Strong) storming are likely on May 13, and periods of G1 (Minor) storms are likely on May 14.
Stay informed and enjoy the light show
As the geomagnetic storm rages on, we must remain vigilant and prepared for the potential consequences. Monitor official sources for updates on the storm’s progress and any further disruptions to our technological infrastructure.
Take a moment to step outside tonight and marvel at the incredible auroras painting the night sky — a stunning reminder of the raw power and beauty of our Sun.
While these solar storms can cause temporary inconveniences, they also provide us with an opportunity to reflect on our place in the universe and the awe-inspiring forces that shape our world.
Stay tuned to Earth.com and the Space Weather Prediction Center (SWPC) for updates.
Understanding geomagnetic solar storms
Geomagnetic storms are disturbances in the Earth’s magnetic field caused by the interaction between the solar wind and the planet’s magnetosphere. These storms can have significant impacts on technology, infrastructure, and even human health.
Causes of geomagnetic storms
Geomagnetic storms typically originate from the Sun. They are caused by two main phenomena:
Coronal Mass Ejections (CMEs): Massive bursts of plasma and magnetic fields ejected from the Sun’s surface.
Solar Flares: Intense eruptions of electromagnetic radiation from the Sun’s surface.
When these events occur, they send charged particles streaming towards Earth at high speeds, which can take anywhere from one to five days to reach our planet.
Effects on Earth’s magnetic field
As the charged particles from CMEs and solar flares reach Earth, they interact with the planet’s magnetic field. This interaction causes the magnetic field lines to become distorted and compressed, leading to fluctuations in the strength and direction of the magnetic field.
Impacts on technology and infrastructure
Geomagnetic storms can have significant impacts on various aspects of modern technology and infrastructure:
Power Grids: Strong geomagnetic storms can induce currents in power lines, causing transformers to overheat and potentially leading to widespread power outages.
Satellite Communications: Charged particles can damage satellite electronics and disrupt communication signals.
GPS and Navigation Systems: Geomagnetic disturbances can interfere with the accuracy of GPS and other navigation systems.
Radio Communications: Storms can disrupt radio signals, affecting communication systems that rely on HF, VHF, and UHF bands.
Aurora formation
One of the most visually striking effects of geomagnetic storms is the formation of auroras, also known as the Northern and Southern Lights.
As charged particles collide with Earth’s upper atmosphere, they excite oxygen and nitrogen atoms, causing them to emit light in various colors.
Monitoring and forecasting
Scientists continuously monitor the Sun’s activity and use various instruments to detect and measure CMEs and solar flares.
This data helps them forecast the timing and intensity of geomagnetic storms, allowing for better preparedness and mitigation of potential impacts.
Historical geomagnetic storms
Some of the most notable geomagnetic storms in history include:
The Carrington Event (1859): The most powerful geomagnetic storm on record, which caused widespread telegraph system failures and auroras visible as far south as the Caribbean.
The Halloween Storms (2003): A series of powerful geomagnetic storms that caused power outages in Sweden and damaged transformers in South Africa.
The Quebec Blackout (1989): A geomagnetic storm that caused a massive power outage affecting millions of people in Quebec, Canada.
Understanding geomagnetic storms is crucial for protecting our technology-dependent world and mitigating the potential risks associated with these powerful space weather events.
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NEE - >>> 1 Incredibly Cheap Dividend Growth Stock to Buy Now
by Reuben Gregg Brewer
Motley Fool
Mar 30, 2024,
https://finance.yahoo.com/news/1-incredibly-cheap-dividend-growth-100000971.html
NextEra Energy (NYSE: NEE) isn't your typical utility stock because its business contains two very different divisions. One provides a strong foundation, and the other provides rapid growth.
The combination has made NextEra Energy a dividend growth standout in the typically slow-growth utility sector. Here's what you need to know about NextEra and why this dividend growth stock is so attractive right now.
NextEra Energy is historically cheap
NextEra Energy's dividend yield is around 3.3% today. That's a touch below the industry average of 3.5%, using the Vanguard Utilities ETF as a proxy.
But NextEra is usually afforded a premium to its peers (more on this below). That 3.3% dividend yield just happens to be near the company's highest levels over the past decade, suggesting that the stock is on sale.
Adding to the allure, NextEra Energy has increased its dividend annually for 29 consecutive years. So there's a very real commitment to returning value to shareholders via reliable dividend growth.
But that brings up the key metric in this story: NextEra Energy's dividend has grown at an annualized rate of 10% over the past decade. That is why the stock is afforded a premium price since half that rate would be considered very good in the utility sector.
Put simply, NextEra Energy is a dividend growth machine and looks cheap today. But why? Perhaps something has changed.
NextEra is still projecting big dividend growth ahead
The truth is that something material has changed in the utility sector. Interest rates have risen dramatically over the past couple of years, and that will make it more expensive for utilities to operate their businesses.
Don't get too caught up in that -- NextEra Energy is projecting 10% dividend growth through at least 2026. There are some important facts to know here.
First, NextEra Energy is two businesses in one. The core operation -- about 70% of the company -- is its regulated utility operation. This division largely consists of Florida Power & Light, one of the largest utilities in the United States, which has long benefited from net migration to the Sunshine State. More customers mean more revenue, and the customer trends are not likely to change anytime soon.
As for higher costs, regulators are likely to consider rising interest rates when they contemplate NextEra Energy's requests for rate increases and capital-spending approvals. Maybe there'll be a short-term effect, but in the long term, higher rates shouldn't materially alter the dynamics.
The remaining 30% of NextEra Energy's business is its fast-growing renewable-power operation. The contracts it signs here are market-based, so they, too, will adjust along with interest rates.
But the real story is growth, with NextEra Energy hoping to roughly double its energy capacity in this division by 2026. In other words, more growth is the expected outcome, and that should further support the strong dividend growth that management is projecting.
The big picture is that, despite rising interest rates, NextEra Energy doesn't see much changing in its long-term prospects. That's opening up an opportunity for dividend growth investors to buy this dividend growth gem while it appears to be on the sale rack.
A unique buying opportunity
NextEra Energy isn't going to be for every investor. If you're seeking high-yield stocks, for example, you should probably keep looking.
But if you're a dividend growth investor or even a growth and income investor, NextEra Energy looks like a very attractive option today. It's not your typical utility, for sure -- but that's exactly why you should find the company and its 10% dividend growth rate so alluring.
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NextEra Energy - >>> Beat the S&P 500 With This Cash-Gushing Dividend Stock
by Matt DiLallo
Motley Fool
March 29, 2024
https://finance.yahoo.com/news/beat-p-500-cash-gushing-091500753.html
NextEra Energy (NYSE: NEE) isn't your average utility stock. Most utilities tend to be slower-growing companies known more for paying higher-yielding dividends. As a result, many struggle to beat the S&P 500. However, while NextEra does pay an above-average dividend (currently yielding 3.4% compared to the S&P 500's 1.3%), it has a proven ability to deliver market-beating total returns. Over the last decade, the utility has produced a 13.1% average annualized total return, outpacing the S&P 500's 12.9% total return.
NextEra should have the power to continue outperforming the S&P 500 in the future. Here's why.
A cash-gushing machine
Like most utilities, NextEra Energy generates lots of stable cash flow. In 2023, it produced $11.3 billion in net cash provided by operating activities. It used $3.7 billion of that cash to pay dividends to shareholders. That gave the company a relatively low dividend payout ratio (59% of its adjusted earnings, well below the peer group average of 65%).
NextEra Energy retained the rest of its steady cash flow to help fund new investments to grow its electric utility in Florida (FPL) and Energy Resources platform. It invested $9.4 billion at FPL, including placing 1.2 gigawatts (GW) of cost-effective solar projects into service and starting up a 25-megawatt hydrogen pilot project at its Okeechobee Clean Energy Center. Meanwhile, it invested roughly $15.7 billion to expand the Energy Resources business, primarily to build new renewable energy capacity. The company funded the shortfall with asset sales and its strong balance sheet.
These investments helped lift its adjusted earnings by 9.3% per share last year. That earnings expansion supported a 10% increase in the company's dividend. NextEra Energy has boosted its adjusted earnings at a 10% compound annual rate over the last decade while delivering 11% compound annual dividend growth. That rapid earnings and dividend growth have helped power its market-beating returns.
The fuel to continue beating the S&P 500
NextEra Energy Partners expects to use its strong cash flow to continue increasing its dividend and invest in expanding its infrastructure. It's investing $85 billion to $95 billion through 2025 in infrastructure projects. FPL expects to add 4.8 GW of solar capacity over the next few years. Meanwhile, its Energy Resources segment has secured over 20 GW of wind, solar, and energy storage projects. It's also investing money to modernize FPL and build energy transmission lines in Energy Resources.
These investments should boost its earnings by 6% to 8% annually through at least 2026, with the expectation that growth will be toward the upper end of that range. Operating cash flow should expand at or above the top end of that range. That should give NextEra Energy the power to increase its dividend by 10% annually through at least 2026. Add in its higher-yielding dividend, and the company's rising earnings should give it the fuel to produce total returns of at least 9% to 11% annually over the next few years.
Meanwhile, its longer-term growth outlook remains equally compelling. According to multiple forecasts, renewable energy demand in the U.S. will grow at a 13% compound annual rate through 2030. That suggests the country will build more capacity over the next several years (375 GW-450 GW) than it did over the past three decades (235 GW). Given the massive amount of renewable energy capacity needed to decarbonize the U.S. economy, there's still plenty of growth potential beyond that time frame. As a leader in the industry, NextEra should keep capturing opportunities to invest in the sector. That should enable it to expand its earnings at an above-average rate, supporting continued dividend growth.
A powerful wealth creator
NextEra Energy's utility and renewable energy operations generate lots of cash, which it uses to pay dividends and invest in expanding its businesses. Those growth-related investments should increase its cash flow in the future, giving it more money to pay dividends. That growing earnings and income should give it the power to continue producing market-beating total returns.
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NEE, DUK - >>> 3 Dividend-Paying Energy Stocks to Buy at a Discount
by Reuben Gregg Brewer
Motley Fool
March 29, 2024
https://finance.yahoo.com/news/3-dividend-paying-energy-stocks-082600370.html
The utility sector is generally one of the more boring segments of the broader energy industry, but that doesn't mean it is always uneventful. In fact, rising interest rates have resulted in Wall Street shunning utility stocks. While there are some good reasons for that, it has opened up an opportunity for long-term income investors to buy reliable dividend stocks like NextEra Energy (NYSE: NEE), Duke Energy (NYSE: DUK), and Black Hills Corporation (NYSE: BKH). Here's a look at each of these energy specialists.
A quick primer on an industry downturn
There's no way to hide the fact that utility stocks are in the dumps today. As the chart below clearly shows, the utility sector, using Vanguard Utilities ETF (NYSEMKT: VPU) as a proxy, has been heading lower while the S&P 500 index has been moving higher. What's been going on? The big issue is that interest rates have been on the rise. That poses two problems for utility stocks.
First, other income options, like certificates of deposit (CDs), are more competitive with some stocks, like utilities, that are known for producing income. If you can get a 5% or so yield from a super-safe CD, why take on the risk of owning a similarly yielding stock? The opportunity for dividend growth is one (very good) reason, but sometimes investors are too short-term focused. As a result, money has shifted out of the utility sector.
Second, and probably more important to consider, is that utilities tend to be capital-intensive companies. That means debt is often a key part of the capital structure. Rising interest rates simply make it more expensive to do business. This will probably hurt near-term financial results throughout the sector. It makes some sense that investors are worried about that. However, these are largely regulated businesses. That means that the government has to approve capital spending plans and rate structures, balancing the need for profit against cost and reliability for customers. Higher rates will, eventually, be taken into consideration in that equation. So, over the long term, slow-and-steady growth is still the likely outcome.
In the end, then, the current industry malaise is probably a long-term opportunity for dividend investors.
Three solid options for dividend investors
NextEra Energy is going to be most attractive to dividend growth investors. Although it owns one of the largest regulated utility operations in the United States (Florida Power & Light), about 30% of its business is dedicated to a rapidly expanding renewable power business. That combination has resulted in annual dividend growth of around 10% on average over the past decade. Management currently believes it can increase the dividend at around that same rate through at least 2026.
That's a pretty astounding pace of dividend growth in the utility sector, which explains why NextEra Energy has long been afforded a premium valuation. But thanks to the current industry downturn, the yield is near a 10-year high at about 3.3%. While that's below the 3.5% industry average, it is still a great opportunity for dividend growth investors; the dividend has been raised annually for 29 consecutive years.
Duke Energy is a bit more conventional. While it is also one of the largest utility companies in the United States, it doesn't have a fast-growing clean energy business like NextEra Energy does. In fact, Duke recently agreed to sell the non-regulated clean energy business it did own. Effectively, it is doubling down on regulated assets, which will increasingly require clean energy investments to be made. But making those investments within the regulated framework will provide more consistent returns. The company has increased its dividend annually for 19 consecutive years and the dividend yield is toward the high end its range over the past decade at 4.3%. Note that the yield is notably above the industry average.
The last utility up is tiny Black Hills Corporation, which has a yield of just about 5%. Like the other two utilities here, that's toward the high end of the range over the past decade. Before moving on to the big reason to like Black Hills, it is worth highlighting just how small it is. This utility's market cap is $3.5 billion, which compares to $72 billion for Duke and a whopping $126 billion for NextEra. That's why it is all the more impressive to see that, of the three, Black Hills is the only one that happens to be a Dividend King, with 55 years' worth of annual dividend increases behind it. It is something of a hidden gem in the utility sector. Like Duke, it is a simple regulated utility, but if you appreciate dividend consistency, it wins hands-down.
There are good options in this out-of-favor industry
Wall Street is particularly downbeat on the utility sector today and that is creating long-term opportunity for dividend investors. You just have to be willing to go against the grain and buy when others are selling. However, if you take the time, you'll find that there are a lot of options in the sector, including dividend-growth stocks like NextEra, boring and reliable giants like Duke, and even Dividend Kings like Black Hills. If you like dividends, don't let this utility sell-off pass you buy without at least doing a deep dive into the space.
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>>> Vistra Corp. (NYSE:VST) - Number of Hedge Fund Investors: 56
https://finance.yahoo.com/news/billionaire-stanley-druckenmiller-top-12-114039919.html
Duquesne Capital’s Q4 2023 Investment Value: $91.87 million
Vistra Corp. (NYSE:VST), headquartered in Irving, Texas, is a prominent integrated retail electricity and power generation company serving customers, businesses, and communities across the United States, spanning from California to Maine. Renowned for its leadership in the energy transformation sector, Vistra Corp. (NYSE:VST) plays a pivotal role in shaping the future of energy.
On March 1, Vistra Corp. (NYSE:VST) announced the successful completion of its acquisition of Energy Harbor Corp. This strategic move enhances Vistra's position in the integrated zero-carbon generation and retail electricity market by adding approximately 4,000 megawatts of 24/7 nuclear generation capacity and expanding its customer base by approximately 1 million retail customers.
By the end of 2023’s fourth quarter, 56 out of the 933 hedge funds surveyed by Insider Monkey were the firm’s investors. Stanley Druckenmiller owned approximately $92 million worth of VST shares as of the end of 2023
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>>> Vistra Corp. (VST), together with its subsidiaries, operates as an integrated retail electricity and power generation company. The company operates through six segments: Retail, Texas, East, West, Sunset, and Asset Closure. It retails electricity and natural gas to residential, commercial, and industrial customers across states in the United States and the District of Columbia. In addition, the company is involved in the electricity generation, wholesale energy purchases and sales, commodity risk management, fuel production, and fuel logistics management activities. It serves approximately 4 million customers with a generation capacity of approximately 37,000 megawatts with a portfolio of natural gas, nuclear, coal, solar, and battery energy storage facilities. The company was formerly known as Vistra Energy Corp. and changed its name to Vistra Corp. in July 2020. Vistra Corp. was founded in 1882 and is based in Irving, Texas. <<<
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>>> Constellation Forecasts Strong Earnings Growth in 2024 and Beyond as Demand and Support for Clean Energy Builds
BusinessWire
February 27, 2024
https://finance.yahoo.com/news/constellation-forecasts-strong-earnings-growth-105500886.html
Initiating full-year Adjusted (Non-GAAP) Operating Earnings per share guidance of $7.23 to $8.03
Nuclear PTC provides earnings visibility and platform for growth
Announcing 25% dividend per share growth, exceeding 10% annual dividend growth target
Started next $1 billion in share repurchases
Targeting long-term base EPS growth of at least 10% through the decade
BALTIMORE, February 27, 2024--(BUSINESS WIRE)--Marking the start of its third year as an independent company, Constellation, the nation’s largest producer of carbon-free energy, will host a virtual investor and analyst event via webcast today to lay out a forecast for earnings growth based on the strength of its industry-leading commercial business and market and policy recognition that nuclear energy is essential to addressing the climate crisis while preserving grid reliability and the nation’s energy security.
"The most valuable commodity in the world today remains clean energy that can be depended on in every hour of every day, and no U.S. company is better positioned to deliver on that promise than Constellation, which has more clean, reliable nuclear capacity than all other U.S. competitive generators combined," said Joe Dominguez, president and CEO of Constellation. "State and federal policies, bipartisan political support, public opinion surveys and increased customer demand for reliable and clean energy all point to strong and growing support for nuclear energy to power our economy for decades to come. Combined with our industry-leading Commercial business that helps our customers achieve their climate goals, we see a growing landscape of opportunities to continue building our business and lead the clean energy transition."
Highlights from the Investor Update
Strong financial outlook with predictable earnings: Constellation initiated guidance for 2024 Adjusted (Non-GAAP) Operating Earnings of $7.23 to $8.03 per share. The Adjusted (Non-GAAP) Operating Earnings guidance excludes the effects of the following from projected GAAP net income:
Unrealized impacts of fair value adjustments
Decommissioning-related activities
Pension and Other Postretirement Employment Benefit (OPEB) non-service credits
Separation costs
Enterprise Resource Program (ERP) system implementation
Other items not directly related to the ongoing operations of the business
Noncontrolling interest related to exclusion items
The nuclear production tax credit (PTC) in the IRA provides a stable foundation for consistent and growing earnings that will allow Constellation to continue investing in growth opportunities, including by adding clean energy generation to its fleet through uprates, repowering wind assets, license extensions and asset acquisitions while also returning capital to shareholders. The PTC provides revenue visibility and also preserves Constellation’s ability to capture upside from tightening power market conditions.
Long-term base EPS growth of at least 10%: Constellation is targeting long-term base earnings per share (EPS) growth of at least 10% through the decade backstopped by the nuclear production tax credit in the Inflation Reduction Act (IRA) and effective deployment of our strong free cash flow generation.
Base earnings, a significant component of total Adjusted (Non-GAAP) Operating Earnings, are consistent, visible earnings that will grow over time and can be modeled using simple price times quantity calculations, such as expected generation volumes times price or customer margins times volumes. The company has opportunities to grow base earnings faster by monetizing the value of the reliable, carbon-free nuclear power generated at its Clean Energy Centers through hourly carbon-free matching solutions, behind-the-meter opportunities like data centers or hydrogen, government clean energy procurements or higher market prices.
Constellation's Assets Are Unmatched
Growth fueled by customer demand: With a customer-facing business that serves three fourths of Fortune 100 companies and 21% of the competitive C&I market, Constellation is well positioned to meet the growing needs of digital infrastructure and other essential industries looking for reliable, carbon-free electricity to power economic growth. U.S. electricity demand is expected to grow twice as fast through 2030 compared with the past decade, while at the same time the grid is growing more dependent on intermittent resources. Major tech companies alone are expected to make significant investments to expand our nation’s digital infrastructure over the next five years, with data centers growing from 2% to 7.5% of U.S. electricity demand by 2030. The nation’s top technology firms have set goals to power this growth with clean and dependable energy. Growing recognition of nuclear energy as a reliable clean energy resource creates opportunities for Constellation to forge new customer relationships and capture additional value from our 180 million MWh of annual clean energy output.
World-class operations are a competitive advantage: Constellation is ranked No. 1 in operational metrics among major nuclear operators, with our clean-energy fleet avoiding the equivalent of 251 million metric tons of carbon dioxide pollution over the past two years. The company’s nuclear fleet achieved a 94.6% capacity factor from 2022-2023, approximately 4% above recent industry average. That additional output compared with industry peers is the equivalent of having another reactor’s worth of power or $335 million in additional annual revenue (pre-tax).
Returning value to shareholders: Constellation announced plans to grow its dividend per share by 25% this year, exceeding the company’s dividend growth target of at least 10% annually. This brings the total dividend increase to 150% in two years. The company completed its first $1 billion stock repurchase plan last year, and in December the board approved an additional $1 billion repurchase with $150 million already executed.
Dividend Declaration: Our Board of Directors has declared a quarterly dividend of $0.3525 per share on our common stock. The dividend is payable on Tuesday, March 19, 2024, to shareholders of record as of 5 p.m. Eastern time on Friday, March 8, 2024.
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>>> Constellation Remains No. 1 Producer of Carbon-Free Energy, New Report Confirms
Business Wire
November 15, 2023
https://finance.yahoo.com/news/constellation-remains-no-1-producer-150000901.html
Annual air emissions report also confirms Constellation’s rate of carbon dioxide emissions is more than four-and-half times lower than that of its next closest peer
BALTIMORE, November 15, 2023--(BUSINESS WIRE)--For the 10th consecutive year, Constellation (Nasdaq: CEG) is the nation’s largest producer of clean, carbon-free energy and boasts the lowest rate of carbon dioxide emissions among the 20 largest private, investor-owned power producers in the United States, according to an independent analysis based on publicly reported 2021 air emissions data.
With more than 23,000 megawatts of clean generating capacity, Constellation’s fleet of nuclear, solar, wind and hydro plants produce about 10% of the nation’s carbon-free energy.
Released today, the annual Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States report showed that the next cleanest company among the group of 20 had more than four-and-a-half times the rate of carbon dioxide emissions (lbCO2e/MWh) as Constellation. With more than 23,000 megawatts of clean generating capacity, Constellation’s fleet of nuclear, solar, wind and hydro plants produce about 10% of the nation’s carbon-free energy. Nearly 90% of Constellation’s annual energy output comes from carbon-free sources and the company has set a goal to produce 95% carbon-free electricity by 2030 and 100% by 2040.
"After this year of record-shattering weather, it is clear that all industries must move faster to reduce emissions and lay the foundation for our clean energy future," said Joe Dominguez, president and CEO of Constellation. "As we transition to a clean grid, we must ensure the lights stay on in every hour of every day, and nuclear energy is the only clean energy resource that can operate around the clock in all weather extremes. Backed by the unmatched reliability of our nuclear fleet, we are continuously seeking ways to increase our clean generation capacity, while helping customers achieve their own sustainability goals through innovations such as clean hydrogen and hourly carbon-free energy matching."
The emissions report benchmarks key air pollutant emissions -- including nitrogen oxide, sulfur dioxide, carbon dioxide and mercury -- from the 100 largest U.S. power producers. It relies upon publicly reported generation and emissions data from the U.S. Energy Information Administration and the U.S. Environmental Protection Agency and has established a clear record of the sector’s environmental performance.
Per the report, zero-carbon resources were the leading source of power generation in the United States in 2022, providing approximately 41% of the nation’s electricity. Nuclear energy led the way, comprising 44% of that total and 18% of all U.S. generation.
Constellation is investing billions of dollars in projects to lower emissions across the company and for its customers:
Last month, the MachH2 clean hydrogen hub, of which Constellation is a major participant, was selected for up to $1 billion in funding by the Department of Energy as part of the bipartisan Infrastructure Investment and Jobs Act. Constellation will use a portion of the hub funding to build the world’s largest nuclear-powered clean hydrogen production facility at its LaSalle Clean Energy Center in Illinois. The project will produce an estimated 33,450 tons of clean hydrogen each year with the goal of lowering emissions for difficult-to-decarbonize industries such as agriculture and transportation.
This year, Constellation announced plans to invest $800 million in new equipment to increase the capacity of its Braidwood and Byron nuclear plants in Illinois. The company also launched a $350 million wind repowering effort to increase the output and lifespan of its renewable energy portfolio.
Constellation also has introduced an hourly carbon-free energy matching product to help customers like Microsoft and ComEd power their operations with carbon-free energy produced at the same time and place it is consumed.
Last month, Constellation acquired a 44% ownership stake in the South Texas Electric Generating Station (STP), a 2,645-megawatt, dual-unit nuclear plant located about 90 miles southwest of Houston. One of the newest and largest plants in the U.S., STP generates enough carbon-free power for two million average homes.
In May, Constellation achieved an industry record for blending high concentrations of hydrogen with natural gas, further proof that hydrogen can be an effective tool to lower greenhouse gas emissions. The test at Constellation’s Hillabee Generating Station showed that with only minor modifications, a 13-year-old existing natural gas plant can safely operate on a blend of 38% hydrogen, nearly doubling the previous blending record for similar generators.
Learn more about Constellation’s efforts to accelerate the transition to a carbon-free future, mitigate the climate crisis and support energy equity and environmental justice in our 2023 Sustainability Report.
About Constellation
A Fortune 200 company headquartered in Baltimore, Constellation Energy Corporation (Nasdaq: CEG) is the nation’s largest producer of clean, carbon-free energy and a leading supplier of energy products and services to businesses, homes, community aggregations and public sector customers across the continental United States, including three fourths of Fortune 100 companies. With annual output that is nearly 90% carbon-free, our hydro, wind and solar facilities paired with the nation’s largest nuclear fleet have the generating capacity to power the equivalent of 16 million homes, providing about 10% of the nation’s clean energy. We are further accelerating the nation’s transition to a carbon-free future by helping our customers reach their sustainability goals, setting our own ambitious goal of achieving 100% carbon-free generation by 2040, and by investing in promising emerging technologies to eliminate carbon emissions across all sectors of the economy.
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>>> Constellation Energy Corp (NASDAQ:CEG)
https://www.insidermonkey.com/blog/5-best-wind-power-and-solar-stocks-to-buy-3-1262185/2/
Number of Hedge Fund Investors: 41
Constellation Energy has several renewable energy projects under its belt. The company operates 27 wind projects across 10 states with a production capacity of 1,400 megawatts of electricity.
As of the end of the fourth quarter of 2023, 41 hedge funds tracked by Insider Monkey had stakes in Constellation Energy.
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>>> Constellation Energy Corporation (CEG) generates and sells electricity in the United States. It operates through five segments: Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions. The company sells natural gas, energy-related products, and sustainable solutions. It has approximately 33,094 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas, and hydroelectric assets. It serves distribution utilities; municipalities; cooperatives; and commercial, industrial, governmental, and residential customers. The company was incorporated in 2021 and is headquartered in Baltimore, Maryland. <<<
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>>> NextEra Energy is a growth and income gem
https://finance.yahoo.com/news/3-utility-stocks-buy-hand-101100971.html
NextEra Energy's 3.7% dividend yield is modest compared to the other two utilities on this list. In fact, it is only 10 basis points above the average of the broader utility sector. But the yield is near a 10-year high for NextEra Energy, suggesting the stock is cheap today.
However, the real linchpin in the story is the average annualized dividend growth of around 10% over the past decade, extremely high by utility standards. Management expects to raise the dividend by that much again in 2024.
The story here comes in two parts. First, NextEra Energy owns the largest utility in Florida, which is a state with a growing population. That's the solid foundation. On top of that, NextEra Energy owns one of the world's largest portfolios of solar and wind power assets. This is a growth business, with management hoping to double its clean energy capacity by 2026.
The combination of these two businesses is expected to produce earnings growth of between 6% and 8% a year through 2026. Even if dividend growth only tracks along with earnings growth after 2024, that's still a great outcome for a growth- and income-oriented utility. Investors should look at this stock, which has increased its dividend annually for nearly three decades and is still on sale.
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>>> Warren Buffett: Charlie Munger was the 'architect' of the modern Berkshire Hathaway
Yahoo Finance
by Myles Udland
Feb 24, 2024
https://finance.yahoo.com/news/warren-buffett-charlie-munger-was-the-architect-of-the-modern-berkshire-hathaway-145356261.html
Warren Buffett's annual letter to Berkshire Hathaway (BRK-A, BRK-B) shareholders published Saturday morning marked the first missive sent to his investors since his longtime right-hand man, Charlie Munger, died last November at 99 years old.
To begin his letter to Berkshire shareholders, Buffett reminded readers of the role Munger played in creating what is now the country's largest conglomerate. A conglomerate, Buffett wrote Saturday, that has "by far...the largest GAAP net worth recorded by any American business."
"In reality, Charlie was the 'architect' of the present Berkshire, and I acted as the 'general contractor' to carry out the day-by-day construction of his vision," Buffett wrote.
"Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades. In a way his relationship with me was part older brother, part loving father. Even when he knew he was right, he gave me the reins, and when I blundered he never — never — reminded me of my mistake."
"In the physical world, great buildings are linked to their architect while those who had poured the concrete or installed the windows are soon forgotten," Buffett wrote.
"Berkshire has become a great company. Though I have long been in charge of the construction crew; Charlie should forever be credited with being the architect."
'I made a dumb decision'
Buffett and Munger both grew up in Omaha, where Berkshire is still headquartered. The two, however, didn't meet until 1959, when Buffett was 29 and Munger 35.
A lawyer by trade and a founding partner at the law firm Munger, Tolles, & Olson which bears his name, Munger was named vice chairman at Berkshire Hathaway in the late '70s.
But Munger and Buffett's investing relationship began long before this formal engagement, with Buffett writing Saturday it was Munger who told him in 1962, "that I had made a dumb decision in buying control of Berkshire."
At the time, Berkshire Hathaway was a struggling textile manufacturer in New England. Textile operations later ended, but the Berkshire Hathaway of today still bears the company's name.
Buffett wrote Saturday that, "Charlie, in 1965, promptly advised me: 'Warren, forget about ever buying another company like Berkshire. But now that you control Berkshire, add to it wonderful businesses purchased at fair prices and give up buying fair businesses at wonderful prices. In other words, abandon everything you learned from your hero, Ben Graham. It works but only when practiced at small scale.' With much back-sliding I subsequently followed his instructions."
Elsewhere in his letter to shareholders, Buffett wrote, "Our goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring."
But Buffett noted the advice from Munger offered nearly 60 years ago to only buy "wonderful businesses purchased at fair prices" means the days Buffett and Berkshire Hathaway had plenty of investment opportunities to choose from are "long behind us."
"This combination of the two necessities I've described for acquiring businesses has for long been our goal in purchases and, for a while, we had an abundance of candidates to evaluate," Buffett wrote.
"If I missed one — and I missed plenty — another always came along. Those days are long behind us; size did us in, though increased competition for purchases was also a factor."
Berkshire purchased insurance company Alleghany for $11.6 billion 2022 and took full control of rest stop operator Pilot earlier this year. Prior to these deals, the company hadn't made a sizable acquisition since its 2015 purchase of Precision Castparts for $37 billion.
"There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others," Buffett continued.
"Some we can value; some we can't. And, if we can, they have to be attractively priced. Outside the U.S., there are essentially no candidates that are meaningful options for capital deployment at Berkshire. All in all, we have no possibility of eye-popping performance."
A 'severe' disappointment
Buffett also touched on the struggles at Berkshire's railroad and utilities businesses in 2023, with the latter serving as a "severe earnings disappointment last year."
In Buffett's view, a shifting regulatory outlook in some states has "broken" a model that relied on private investment backed by what Buffett called a "fixed-but-satisfactory-return" for these operators. Agreements that were made on a state-by-state basis.
"Whatever the case at Berkshire, the final result for the utility industry may be ominous: Certain utilities might no longer attract the savings of American citizens and will be forced to adopt the public-power model," Buffett wrote. "Nebraska made this choice in the 1930s and there are many public-power operations throughout the country. Eventually, voters, taxpayers and users will decide which model they prefer.
"When the dust settles, America’s power needs and the consequent capital expenditure will be staggering. I did not anticipate or even consider the adverse developments in regulatory returns and, along with Berkshire’s two partners at BHE, I made a costly mistake in not doing so."
'Berkshire is built to last'
As he does most years, Buffett also took extensive time in this year's letter to write about his overarching investment philosophy and how it impacts the current iteration of Berkshire Hathaway.
For aspiring investors looking to Buffett for insights on how to manage their own portfolios, these passages are the main draw.
The modern Berkshire Hathaway, in Buffett's view, is built to both protect against and take advantage of the inevitable seizures and panics that have, and will again, gripped markets.
"Indeed, markets can — and will — unpredictably seize up or even vanish as they did for four months in 1914 and for a few days in 2001," Buffett wrote. "If you believe that American investors are now more stable than in the past, think back to September 2008. Speed of communication and the wonders of technology facilitate instant worldwide paralysis, and we have come a long way since smoke signals. Such instant panics won't happen often — but they will happen."
In turn, Berkshire holds a pile of cash and highly-liquid Treasury bills that Buffett called "far in excess of what conventional wisdom deems necessary."
Berkshire also does not pay dividends — a preordained cash outlay for companies — and makes no commitment on the size of any future stock buybacks. Buffett runs Berkshire Hathaway in a manner that keeps cash on hand for the sake of keeping cash on hand, not for some planned future deployment.
"During the 2008 panic, Berkshire generated cash from operations and did not rely in any manner on commercial paper, bank lines or debt markets," Buffett wrote. "We did not predict the time of an economic paralysis but we were always prepared for one.
"Extreme fiscal conservatism is a corporate pledge we make to those who have joined us in ownership of Berkshire."
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NextEra Energy - >>> 2 No-Brainer Utility Stocks to Buy With $500 Right Now
by Reuben Brewer
Motley Fool
February 22, 2024
https://finance.yahoo.com/news/2-no-brainer-utility-stocks-102000724.html
Building and maintaining power plants is expensive, which is why utilities often carry a lot of debt. That's been a problem on Wall Street because investors are worried that the swift rise in interest rates will dent utility earnings. Thus, the utility sector has been out of favor. That's great news for long-term investors, even if all you have to invest is $500, because you can buy great companies at reasonable -- if not cheap -- prices.
The list includes utility giant NextEra Energy (NYSE: NEE) and relatively small Black Hills (NYSE: BKH), which happens to be a Dividend King. Here's what you need to know about these two utility stocks.
NextEra is a 2-in-1 play
The core of NextEra Energy's business is Florida Power & Light, the largest electric utility in the Sunshine State. This has been a very good region in which to operate because of the long-term migration patterns toward warmer climates, which has resulted in an increased customer base. Simply put, more customers means more revenue.
However, the really interesting story here isn't the company's regulated electric utility operations. What sets NextEra apart from its peers is its massive clean energy business, which is among the largest in the world. This has been a long-term growth engine. That shows up most compellingly in the dividend, which has been increased at an annualized rate of 10% for a decade. Half of that rate would be considered very good for a utility. The company expects 10% dividend growth in 2024 and continued solid earnings expansion through at least 2026.
The problem with NextEra is that investors are well aware that its mix of regulated assets and clean energy growth is producing strong results. The shares are usually afforded a premium valuation. But given the rise in interest rates, NextEra's stock has pulled back. The 3.6% dividend yield on offer today is only average for a utility, but it is near the highest levels of the past decade for NextEra Energy. In other words, this strong performer looks like it is on sale.
There's another impressive thing about the $117 billion market cap of NextEra Energy: It has increased its dividend annually for 29 consecutive years.
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>>> One 'safe' trade wallops another
Yahoo Finance
by Julie Hyman
October 4, 2023
https://finance.yahoo.com/news/one-safe-trade-wallops-another-100038814.html
Bond yields are the new bane of the equity market.
But unlike other market moments over the past 18 months — like when they smacked down tech stocks — the pain is being felt much more widely.
In particular, traditional interest rate sectors that had mostly shrugged off earlier surges are now taking a hit. Since the beginning of August, when the 10-year yield hit 4%, utilities and real estate have plunged, falling about 16% and 14%, respectively.
Two key factors make these sectors particularly sensitive to rising rates. First off, they tend to have high debt loads, so their servicing costs are soaring.
Secondly, these have relatively high dividend yields, so they are in direct competition with Treasuries.
The SPDR Utility ETF yields 3.3%; the SPDR Real Estate ETF yields 3.9%. Contrast that with 10-year notes, where investors’ yield is hovering around 4.75% — ever higher out to 30 years. And as government debt, it’s viewed as virtually risk-free.
The latest bout of selling in utilities in particular on Monday was sparked by a warning last week from NextEra Energy (NEE) subsidiary NextEra Energy Partners (NEP).
NextEra happens to be the largest power company in the US by market cap.
The folks over at Bespoke Investment Group highlighted the slump in utilities in their Tuesday morning note, writing that shares have been “decimated.” Looking at the sector’s five-day slide, they found it’s underperforming the S&P 500 over that period by the most in a year.
So now what? Perhaps a bounce — which investors saw (at least somewhat) on Tuesday as the SPDR Utility ETF rose 1.1% while the S&P 500 fell in counterpoint 1.37%.
“It isn’t often that you see the sector get this oversold,” Bespoke wrote in that pre-bounce note.
Cantor Fitzgerald head of derivatives and cross asset Eric Johnston said “utes” could be poised to rebound.
In a Tuesday morning note, he laid out the momentum and technical indicators showing the XLU — that utility ETF — could bounce.
“With the macro getting very dicey, investors may soon look to utes again as a place of safety. At that point, everyone has already sold,” Johnston wrote.
Utilities could prove attractive if investors get more worried about the macro picture, since they’re typically viewed as defensive, which, to be fair, is a status at times in conflict with its interest rate sensitivity.
Maybe it was just all this positive energy that fueled Tuesday’s gains. Or perhaps the bounce is real and we’re pulling up off the bottom.
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>>> Why NextEra Energy Stock Plunged to 3-Year Lows This Week
Motley Fool
By Neha Chamaria
Sep 29, 2023
https://www.fool.com/investing/2023/09/29/why-nextera-energy-stock-plunged-to-3-year-lows-th/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
NextEra Energy's subsidiary slashed its long-term dividend growth guidance to 5% to 8%.
NextEra Energy itself, however, still expects to grow annual dividend by 10% through 2024 at least.
The stock's fall appears unjustified and offers investors a great opportunity to buy.
What happened
Shares of NextEra Energy (NEE -8.97%) crashed this week to three-year lows and were trading 15% lower through 1:30 p.m. ET Friday, according to data provided by S&P Global Market Intelligence.
The utility giant reaffirmed its long-term earnings and dividend growth guidance through 2026, but the markets and analysts are spooked after NextEra Energy's subsidiary gave investors a nasty shock this week.
So what
NextEra Energy Partners (NEP -16.70%), a wholly owned subsidiary of NextEra Energy, slashed its annual dividend growth outlook to 5% to 8% through at least 2026, with a target growth rate of 6%. Until last month, the company was confident of growing its dividend payout by 12% to 15% through at least 2026. Management said higher interest rates were making it difficult for the company to fund its growth plans, and it can focus on "higher-yielding growth opportunities" by reducing its dividend growth target.
So while it's easy to understand why NextEra Energy Partners stock tanked this week, what does this have to do with NextEra Energy? There could be three reasons why investors are worried.
First, NextEra Energy's management also manages the subsidiary, and investors perhaps believe the latter's dividend outlook cut is a reflection of NextEra Energy's growth struggles as well.
Second, NextEra Energy Partners typically acquires renewable energy assets from its parent to grow. This week, though, it said while it'll continue to acquire assets from NextEra Energy, it'll primarily focus on revamping its existing wind energy portfolio for growth. Investors in NextEra Energy believe this will mean fewer drop-down transactions for the company and will hurt its own financing plans.
Third, lower dividends from the subsidiary will also mean less extra income for NextEra Energy.
Now what
Several analysts cut their price targets on NextEra Energy stock this week, but I believe the sharp drop in the share price is unwarranted, especially after the two announcements from the company this week that makes the stock appealing right now.
First, NextEra Energy said it will sell its Florida natural gas assets to Chesapeake Utilities for $923 million in cash. It wants to redeploy capital into core business (which could mean its electric utility and renewable energy businesses), and that sounds like a smart move.
Second, NextEra Energy is sticking with its financial goals. It expects to earn at least $2.98 and $3.23 in adjusted earnings per share (EPS) in 2023 and 2024, respectively. The company's adjusted EPS was $2.90 per share last year. For 2025 and 2026, it sees 6% to 8% growth in adjusted EPS off its 2024 range.
NextEra Energy even stated, yet again, that it will be "disappointed" if it cannot deliver numbers at or near the "top end" of its guidance range through 2026. The company also expects to grow its dividend per share by around 10% annually through at least 2024.
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>>> A fight brewing in Oregon could decide how we heat our homes and cook
Washington Post
by Anna Phillips
4-21-23
https://www.msn.com/en-us/news/us/a-fight-brewing-in-oregon-could-decide-how-we-heat-our-homes-and-cook/ar-AA1a92Em?OCID=ansmsnnews11
The liberal stronghold of Eugene, Ore., might seem like an unlikely place for the fossil fuel industry to flex its muscles. But in the months ahead, the gas industry is preparing to pour millions of dollars into a campaign to overturn Eugene’s ban on gas hookups in new homes, turning the city into a test case for blocking similar bans nationwide.
Last month, Sue Forrester, the American Gas Association’s vice president for advocacy, told a meeting of gas utilities, contractors and labor unions that gas advocates expect to spend $4 million on the Eugene campaign, according to an audio recording obtained by The Washington Post.
“This is something that we want you all to pay attention to because what happens here will spread across the country,” Forrester said. “If there’s a win here, it’s certainly going to help the case that you don’t need to be banning gas infrastructure, gas stoves, period, but especially in new construction.”
As climate activists push for electrification across the country, the future of gas-burning stoves, furnaces and other appliances is increasingly in doubt. Scientists and environmentalists say they are not just a climate concern, but also a health threat — a source of indoor air pollution that contributes to asthma. Dozens of cities and counties have adopted bans on gas hookups in new buildings, part of an effort to cut emissions from homes and businesses that account for about 11 percent of the nation’s carbon pollution.
But the gas industry isn’t letting this movement grow unchallenged. Its lobbyists and industry allies have persuaded 20 states to pass legislation preempting local gas restrictions, and they are hoping to undo existing bans.
A city of about 175,000 people, Eugene now finds itself girding for battle. Environmentalists, city leaders and high-school-student activists are organizing to defend Oregon’s first gas ban, which the city passed earlier this year.
Eugene, home to the University of Oregon, has a long history of enacting climate-friendly laws, including policies encouraging people to ditch their cars for cleaner transportation. But the local gas utility, NW Natural, argues the city has overstepped by banning gas and has funded a referendum campaign to overturn the law that has garnered more than enough signatures to appear on the city’s November ballot.
This means that, for the first time in the United States, voters will weigh in directly on the future of gas in new homes, turning a local ballot skirmish into one with national implications.
Environmentalists fear a gas industry victory here could cascade, stifling nascent efforts to get fossil fuels out of buildings in other parts of Oregon and in other U.S. cities and counties.
“I believe we’re the vanguard, that we are leading the way for other cities in the Northwest and the nation to follow, and that’s profoundly threatening to an industry that is built on expanding their customer base,” said Eugene Mayor Lucy Vinis. The ballot initiative “has a serious chilling effect,” she said, “and I think that’s the intention.”
David Roy, a spokesman for NW Natural, said the company believes Eugene voters should have a direct say in whether to ban gas in new homes. “Thousands of those residents have already weighed in with the same sentiment,” he said in an email, “which is why NW Natural supports the campaign.”
In a statement, Karen Harbert, president and chief executive of the American Gas Association, said Eugene’s gas ban would “drive up energy bills for Oregonians with little environmental gain.” Adam Kay, a spokesman for the group, confirmed that Forrester spoke at the meeting last month, but did not respond to a question about whether the industry group planned to contribute financially to the pro-gas campaign.
NW Natural has already spent more than $900,000 in cash and in-kind benefits to overturn the gas ban, according to campaign finance data. But as Forrester’s comments suggest, that may only be a start.
“Can you imagine what $4 million is gonna look like on a spend there?” she said last month, according to the audio recording. “And that’s just the assumption that the campaign on the ground on the pro-gas side is expecting to spend.”
Eugene’s ordinance could also face legal challenges. On Monday, a federal appeals court struck down the city of Berkeley’s first-in-the-nation gas ban, dealing a potential setback to that California city and 25 others with similar ordinances.
For NW Natural, the future of its business is on the ballot. For the gas industry nationwide, the stakes are also high, since its customers are clustered in urban, densely populated areas, where building gas lines has delivered the biggest payoff. These parts of the country also tend to have the most Democratic, climate-conscious voters, meaning the industry is facing a revolt from within its customer base.
Berkeley, Calif., kick-started the movement in 2019, and since then, dozens of cities and counties in California, Washington and Massachusetts have effectively banned gas in most new buildings. Big cities like Seattle, San Francisco and Washington, D.C., have joined the push and, in 2021, New York City became the largest municipality in the world to bar most new buildings from using gas.
While the gas industry has fought back aggressively, its push for preemption laws has been more successful in red states than blue states, where Democratic majorities in state capitals have largely rejected them. One such bill failed in Oregon’s legislature earlier this year.
To buck the trend, the industry is trying a different tactic: spending millions to convince liberals that gas is a clean energy source.
“Eugene is a dark-blue bastion for progressive politics in the state,” said Dylan Plummer, a senior campaign representative with the Sierra Club. “I think NW Natural picked Eugene to use it as a test balloon — to say if we can win in Eugene, we can win anywhere.”
Depending on whom you ask, the gas company’s campaign is either an attack on Eugene’s democratically elected leaders, or a needed intervention to rein in liberals who’ve lost touch with their constituents.
The gas industry-backed committee has framed its campaign as protecting consumer choice. Its supporters say that ditching gas for electricity in new homes will discourage developers from building in Eugene, leave residents in the cold during power outages and do little to lower the city’s greenhouse gas emissions.
“We have heard pretty clearly from the business community that this will definitely affect economic development and job growth,” said campaign manager Anne Marie Levis, adding that NW Natural is one member of a coalition that includes home builders, the restaurant industry, and two chambers of commerce groups.
Some residents, like Douglas Moorhead, fear this law is only the beginning. The council could eventually go further, he said, forcing homeowners to give up their gas stoves and furnaces. “To outlaw gas is fanatical,” he said.
Years ago, he developed a manufactured-home community in Eugene where incoming residents could choose electric or gas heating — the vast majority chose gas, he said. The 70-year-old project manager said he is skeptical of humans’ role in global warming, but even if he did agree with scientists’ calls for people to stop burning fossil fuels, he’s not convinced that banning gas would accomplish much.
“Even the city’s own studies have shown it’s going to reduce the carbon footprint for Eugene less than 1 percent — it’s very small,” Moorhead said. “And yet it’s an easy way of looking like you’re doing big things.”
Gas ban proponents counter that electrification would make it cheaper to build new homes, as developers would not have to pay for gas lines to be laid down, and that advances in heat pump technology have made them suitable for cold climates. Vinis said that Eugene’s gas usage has been increasing by about 2 percent annually, locking in years of higher emissions and ultimately making it more difficult for the city and homeowners to convert existing buildings to electricity.
“The advantage of drawing a line and saying from here on in new housing won’t have this fossil fuel infrastructure is we’re avoiding future costs,” she said. “It’s not insignificant, it’s worth doing,” she said of the ban, “and we’re not impacting current households.”
Whether Eugene residents will support or overturn the gas ban may come down to how the ballot measure is written. Soon after the city crafted ballot language, attorneys for environmental advocates filed a legal challenge calling it misleading and arguing that it did not make clear the gas prohibition only applies to new construction. They suggested alternative wording that would tell voters the gas ban is part of the city’s efforts to comply with its climate code, which requires a sharp reduction in fossil fuel use.
“They’re thinking that as long as people understand this is part of a broader strategy to reduce our fossil fuel emissions, it’ll survive the referendum. And I suspect that’s true,” said Craig Kauffman, an associate professor of environmental politics at the University of Oregon.
Eugene residents tend to support progressive causes, Kauffman said, and they have repeatedly backed city leaders who campaigned on addressing climate change. In recent years, the city, like much of the Pacific Northwest, has suffered drought, deadly heat waves and destructive wildfires in forests that historically have gotten too much rainfall to burn — events that scientists have linked to an overheating planet.
“NW Natural is hoping they can just frame this as ‘choice is good.’ And if you just frame it like that — ‘Do you want choice or no choice?’ — there’s a possibility you could get a majority of people saying, ‘Yeah, I want choice,’ ” Kauffman said. “That’s where I think the battle is headed.”
Eugene’s status as a college town could be another factor in the vote. Dozens of university students attended the two public hearings the City Council held on the gas ban late last year to speak in favor of the ordinance. Last month, high school junior Milla Vogelezang-Liu and other youth organizers participated in a walkout of local high school and college students protesting NW Natural’s anti-electrification efforts.
If college students turn out in force in November, it could be a problem for the gas industry.
“The youth vote is what is making the difference on the climate front. It’s flipping seats, flipping states,” said Victoria Whalen, a law student at the university, who attended one of the City Council hearings to support the gas ban. But like many students, Whalen is registered to vote in her home state, where she feels her voice is needed more than in liberal-leaning Oregon. And apart from when they coincide with the presidential cycle, Vinis said, city elections don’t usually draw university students in large numbers.
Forrester, the industry official, told her colleagues in last month’s meeting that student voter turnout “is something really to keep your eye on.”
“It’ll be interesting to see what they do with the students there, whether they will register to vote, whether they will turn out and vote,” she said in the recording.
Oregon has seen expensive ballot measures before, but the planned spending by the pro-gas campaign is unlike anything Eugene has experienced in recent memory, said local elected officials. In a typical citywide election, a candidate might raise between $100,000 to $150,000, Vinis said. The prospect of $4 million flooding a city of only 118,000 registered voters has some of the ban’s advocates wondering if it’s even possible to defend it.
“It’s really going to be an uphill, muddy battle. It’s the giant versus the little people,” said Emily Semple, a Eugene City Council member who voted in favor of the ban. “I don’t know how we’re going to stand up to that.”
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NextEra Energy - >>> 3 Dividend Stocks That Will Thrive in a Low-Carbon Future
Motley Fool
By Daniel Foelber, Scott Levine, and Lee Samaha
Nov 3, 2022
https://www.fool.com/investing/2022/11/03/3-dividend-stocks-thrive-low-carbon-energy-future/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
NextEra Energy is finally hitting its stride.
Johnson Controls can help reduce carbon emissions for building owners and operators.
Brookfield Renewable operates a massive portfolio of renewable energy assets.
The energy transition offers immense opportunity for long-term investors.
The energy transition presents economic and environmental opportunities for the public and private sectors. Whether it's lowering emissions for legacy industries and existing processes or implementing new technologies that can support a lower carbon future, there is a heightened focus on sustainable growth and environmental, social, and governance investing.
NextEra Energy
NextEra Energy (NEE 1.17%), Johnson Controls International (JCI 5.74%), and Brookfield Renewable (BEP -0.20%) (BEPC 0.59%) are three quality dividend-paying companies with prospects that are aligned with the energy transition.
Improved profitability is the key for NextEra Energy
Daniel Foelber (NextEra Energy): Last Friday, NextEra Energy reported another excellent quarter. The regulated electric utility posted 13% growth in adjusted earnings per share (EPS) in the third quarter versus a year ago.
The company has two main business units. Florida Power & Light (FPL) is the legacy business that supports more than 12 million folks across Florida. That unit alone made over $1.07 billion in net income for the quarter. Meanwhile, NextEra Energy Resources (NEER) is the company's (mostly) renewable energy arm. It finances and operates utility-scale projects across North America. NEER's profitability has improved over the years. It made $722 million in adjusted earnings for the quarter.
NextEra Energy has grown to become the largest renewable energy operator in North America, mainly by using excess free cash flows from FPL to fund NEER's development. It's worth noting that FPL is also investing in solar to shift its energy mix away from natural gas. But NEER's improved profitability is an excellent sign that the business unit is becoming self-sufficient.
Over time, NEER's profitability should help NextEra Energy pay down debt and fund future dividend raises. Having paid and raised its dividend for 28 consecutive years, NextEra Energy is a Dividend Aristocrat with a proven track record of returning value to shareholders.
NextEra Energy is also a reliable business that is able to accurately forecast performance multiples years into the future. For the full year 2022, it is guiding for adjusted EPS of $2.80 to $2.90. For 2023, it expects adjusted EPS of $2.98 to $3.13 followed by $3.23 to $3.43 in 2024 and $3.45 to $3.70 in adjusted EPS in 2025. It also expects to grow its dividend by 10% per year through at least 2023 and 2024. NextEra Energy remains a well-rounded utility stock with a nice blend of growth and reliable passive income from its 2.3% dividend yield.
Johnson Controls International
Long-term growth prospects are excellent for Johnson Controls
Lee Samaha (Johnson Controls): Around 50% of carbon emissions come from the built environment, including 27% from building operations. Building owners and operators must invest in their properties to meet their net-zero emissions goals. That's the driving force behind the case for buying Johnson Controls stock.
The company has a multiyear opportunity to benefit from a cycle of retrofit investment by building owners. And the global pandemic has created an increased awareness of the need for adequately ventilated, healthy, clean buildings. Throw in the dramatically increased gains in building efficiency from using digital technology to manage structures' operations better, and it's not hard to see why building owners are likely to invest.
This speaks to an opportunity for Johnson Controls to grow sales of its heating, ventilation, air-conditioning, building controls, and fire & security products. Indeed, a quick look at revenue and order trends across its industry in 2022 confirms how vital the industry is now.
That said, Johnson Controls did disappoint investors earlier in the year. It's not that orders and backlog growth aren't firm; it's more the case that management was too optimistic over its ability to overcome supply chain pressures. For example, the company found it challenging to execute on its backlog of higher-margin building controls, given an undersupply of semiconductors.
Still, those supply chain pressures will likely ease, and the company's long-term prospects look good. Throw in a 2.8% dividend yield, and the stock is attractive for income-seeking investors.
Brookfield Renewable Corporation Inc.
A powerful path to pocketing some passive income
Scott Levine (Brookfield Renewable): While some companies dip their toes in low-carbon initiatives, Brookfield Renewable is fully immersed. The business includes more than 6,000 power-generating facilities in its portfolio of assets that represent a variety of renewable energy sources: solar, wind, hydropower, and energy storage.
Located around the globe, these assets account for about 24 gigawatts (GW) of generating capacity. For income investors interested in exposure to companies that will prosper from the growing push toward low-carbon power sources, Brookfield Renewable (with a forward dividend yield of 4.2%) is a worthy consideration.
Management's commitment to rewarding investors is undeniable. Since its start in 2000, Brookfield Renewable has increased its distribution to unitholders at a 6% compound annual rate, from $0.38 per unit in 2000 to $1.28 per unit in 2022.
And it's likely that the distribution will continue powering higher for the foreseeable future. Brookfield Renewable consistently articulates a target of annual distribution growth of 5% to 9%. Skeptics might question whether management's dedication to shareholders is jeopardizing the company's financial well being, but the fact that the company has an investment-grade credit rating of BBB+ from Fitch Ratings should allay those concerns.
Brookfield Renewable has a robust pipeline of projects -- about 62 GW of generating capacity -- to support future growth. From 2021 to 2026 alone, management expects to increase its portfolio by 3% to 5% from those projects in its pipeline, additions that will help the company to grow its funds from operations by about 10% per unit.
But growth isn't solely coming from organic sources. Brookfield recently demonstrated its interest in acquisitions with the announcement that it plans on partnering with Cameco to acquire Westinghouse Electric, a global leader in nuclear services.
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>>> NextEra Energy - is one of the country's largest electric utilities. It also has a sizable energy resources business, which operates renewable energy facilities, natural gas pipelines, and electric-transmission lines. The utility business generates steady earnings backed by government-regulated rates, while the energy resources segment produces stable fee-based cash flow.
https://www.fool.com/investing/2022/03/12/want-stability-these-3-energy-stocks-are-as-safe-a/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
The company also boasts a top-tier financial profile. It has a lower dividend-payout ratio than other utilities and one of the strongest balance sheets in the sector. That's giving it the financial flexibility to invest billions of dollars in expanding its industry-leading clean energy infrastructure operations.
That should enable the company to continue delivering steady earnings and dividend growth. NextEra has expanded its adjusted earnings per share at an 8.4% compound annual growth rate since 2006, while growing the dividend at a 9.8% compound annual rate during that time frame.
Overall, it has delivered over 25 years of consecutive dividend growth, qualifying it as a Dividend Aristocrat. It currently expects to grow its payout by around 10% annually through at least 2024, powered by its clean energy investments and rock-solid financial profile.
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>>> NextEra Energy
https://www.fool.com/investing/2022/03/27/3-no-brainer-stocks-buy-if-us-dips-into-recession/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
The first stock begging to be bought if the U.S. dips into recession is electric utility NextEra Energy ( NEE 0.83% ).
The great thing about utility stocks is they're highly predictable, which isn't a bad thing when economic uncertainty becomes commonplace during a recession. If you own a home or rent, you very likely need electricity to live comfortably. This leads to pretty consistent demand from one year to the next, as well as highly transparent cash flow.
What separates NextEra Energy from its competition, other than its industry-leading market cap, is the company's focus on developing and supporting renewable energy projects. No utility in the country is generating more capacity from solar or wind power; and with $50 billion to $55 billion set aside for capital expenditures between 2020 and 2022, it's unlikely any other electric utilities will come close to dethroning NextEra.
Additionally, the company has benefited from historically low lending rates over the past couple of years. This access to cheap capital, coupled with markedly lower electricity generation costs, has helped propel its compound annual growth rate to the high single digits for more than a decade. For context, most electric utilities grow by a low single-digit percentage on an annual basis.
As one final note, NextEra Energy's traditional utility operations that aren't powered by renewables are regulated. Although this means the company can't just pass along rate hikes anytime it wants, it also ensures it doesn't have to face potentially volatile wholesale electricity pricing. This is another piece of the puzzle that makes NextEra's cash flow very predictable.
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American States Water - >>> This stock could multiply your wealth without your realizing
https://www.fool.com/investing/2022/03/26/3-dividend-aristocrats-that-get-more-attractive-as/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Neha Chamaria (American States Water): You probably already know Dividend Aristocrats are among the safest dividend stocks you can own, but it's nothing short of a golden opportunity when the share price of a company that has raised its payouts annually for more than six decades is falling. American States Water is one such stock. It's down almost 16% so far this year.
In fact, American States Water is more than just a Dividend Aristocrat -- it's the Dividend King with the longest-running streak of payout hikes at 67 consecutive years. No other publicly listed company in the U.S. has ever topped that.
So why's the stock falling, you may ask? It's partly because American States Water missed revenue estimates in its last quarter, and partly because investor focus has lately shifted to industries benefiting from the ripple effects of Russia's invasion of Ukraine. American States Water is, after all, a water utility with a stable, predictable, and resilient business that rarely ebbs and flows with the economy.
2021 was a strong year for American States Water. Its earnings per share grew by 9.4% thanks to low costs and the company's power to pass on rising water supply costs to consumers. Management is targeting a compound annual growth rate of at least 7% in its dividend payouts over the long term. That's a solid policy, and it could, in fact, dole out much bigger increases if history is anything to go by. Its dividends averaged compound annual growth of almost 10% between 2011 and 2021.
The prospect of growth like that is exactly why this 1.7%-yielding stock should attract you every time a price slide makes it a better bargain.
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NextEra Energy - >>> This high-powered utility rarely goes on sale
https://www.fool.com/investing/2022/03/26/3-dividend-aristocrats-that-get-more-attractive-as/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Matt DiLallo (NextEra Energy): NextEra Energy is one of the best value creators in the utility sector. It has significantly outperformed the S&P 500 and the S&P 500 Utility Index in the last three-, five-, 10-, and 15-year periods. Since 2006, the company has generated a more than 976% total return, vastly outpacing the S&P 500 (357% total return) and the utility index (nearly 242% total return).
The key to its success has been its consistent above-average growth. NextEra has grown its adjusted earnings per share at an 8.4% compound annual rate since 2005 while increasing its dividend at a 9.8% compound annual rate. Overall, NextEra has given its investors raises for 26 straight years.
Because of this success, NextEra Energy has historically traded at a premium valuation compared to other utility stocks. It currently sells for nearly 30 times its forward earnings, whereas its closest peers fetch less than 20 times forward earnings. Broad market sell-offs are among the few times when shares of NextEra trade at more attractive valuations and dividend yields.
That was the case earlier in the year. Shares tumbled more than 20% amid the market sell-off and the unexpected news that its longtime value-creating CEO was retiring. That decline pushed NextEra's forward PE ratio closer to 25 and its dividend yield above 2%. That buying opportunity didn't last long. NextEra has already clawed back more than half of its decline.
NextEra expects to continue growing its earnings and payouts at above-average rates. Because of that, investors should consider putting it near the top of their shopping lists for the next stock market sell-off, when they could scoop up shares of this high-quality utility at a more attractive price.
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>>> NextEra Energy
https://www.fool.com/investing/2021/08/23/5-no-brainer-stocks-to-invest-1000-in-right-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Another no-brainer stock to invest $1,000 in right now is the nation's largest electric utility stock, NextEra Energy (NYSE:NEE).
Typically, electric utility companies grow by a low single-digit rate, but are buoyed by predictable cash flow, which allows them to pay out market-topping yields in the 2% to 4% range. NextEra isn't like your typical utility stock. That's because it's been investing tens of billions of dollars into renewable energy projects that are designed to lower its electric generation costs and significantly lift its growth rate. NextEra generates more capacity from solar and wind power than any other utility in the country, and it's translated into the company averaging a high single-digit growth rate for more than a decade. Between 2020 and 2022, NextEra is doling out $50 billion to $55 billion for new infrastructure projects.
Although green energy is the future, NextEra does still enjoy a healthy amount of cash flow from its regulated operations (i.e., those not powered by renewable energy). Some folks might see the need to request rate hikes from state public utility commissions as a nuisance. The reality is that regulated utilities avoid potentially volatile wholesale market pricing and have exceptionally transparent cash flow.
As long as lending rates remain favorably low, look for NextEra to be on the leading edge of renewable energy innovation.
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>>> Here's Why You Should Invest in Water ETFs
Zacks
by Neena Mishra
July 20, 2021
https://www.yahoo.com/now/heres-why-invest-water-etfs-170005964.html
Water is essential to life, and while we usually take it for granted, it is a precious commodity with a limited supply. Population growth, pollution, and climate change are leading to shortages of clean and accessible freshwater.
Water shortages have caused drought in California, rationing in South Africa, deadly protests in Iran and clashes among African countries. Water scarcity is already a big problem in countries with high population density. Per United Nations Environment Program, almost half the global population will be living in areas of high water stress by 2030.
President Biden’s infrastructure bill includes $55 billion for water infrastructure and other water system related investments. Investing in water could be a good long-term bet for those concerned about its sustainability. It is also a good option for environmentally focused investors.
The Invesco Water Resources ETF (PHO) holds companies that create products designed to conserve and purify water. The First Trust Water ETF (FIW) invests in companies that derive a large portion of their revenues from the potable and wastewater industry. The Invesco S&P Global Water Index ETF (CGW) holds water utilities, infrastructure, equipment, instruments and materials companies.
Waters Corporation (WAT), Danaher Corporation (DHR) and Roper Technologies (ROP) are among the top holdings in these ETFs.
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>>> Introducing the Global X Clean Water ETF (AQWA)
Global-X
https://www.globalxetfs.com/introducing-the-global-x-clean-water-etf-aqwa/
On April 12th, 2021, we listed the Global X Clean Water ETF (AQWA) on Nasdaq. AQWA seeks to invest in companies advancing the provision of clean water through industrial water treatment, storage and distribution infrastructure, as well as purification and efficiency strategies among other activities. Further, AQWA incorporates Environmental, Social & Governance (ESG) screens and follows ESG proxy voting guidelines to affect positive change alongside financial returns.
Access to clean water is becoming a dire global challenge – one that may require rethinking all aspects of the water value chain with a greater focus on sustainability and making significant investments in water infrastructure and related products and services.
Water fuels life on earth and is a fundamental input for economic productivity. While it is seemingly abundant, competing uses and structural challenges presented by population growth, pollution, and climate change are stretching water resources precariously thin. Clean water – the water we drink, prepare our food with, and use for sanitation – faces the most immediate pressure with the direst societal and economic impacts. Over 2.3B people live in water-stressed countries and in 2019, unsafe drinking water resulted in more deaths than diabetes, malaria, or HIV/AIDs. 1,2,3
Sub-optimal water management practices, alongside neglected water infrastructure development and maintenance, is much to blame for our current predicament. Fortunately, a shift to a more sustainable model is possible, led by government policy, technological innovation, and growing consumer and public health advocacy. Keys to this transition include:
Sustainable and next-generation water sourcing
Innovation in water treatment and distribution
Wastewater management and water reuse
In the following piece, we delve into the current challenges in the water value chain, explore how modernized water management and infrastructure will be critical to turning the tide on this crisis, and discuss how AQWA provides exposure to this critical theme.
SUSTAINABILITY STARTS AT THE SOURCE
Boundless oceans and towering glaciers deceive many into believing that we have a limitless supply of water to draw from. But in fact, only 0.3% of all water on earth is useable.4 And to get that useable water into our homes, farms, and businesses, it must follow a multi-faceted cycle, which touches a variety of companies and services.
Nearly all water used by humans comes from freshwater sources that are replenished by precipitation (rain, snow, hail) and are typically classified as either surface water or groundwater. Surface water comes from lakes, reservoirs, ponds, rivers, streams, and other low-saline bodies of water and is extracted (abstracted) using motorized pumps, infiltration galleries (drains), and/or diversion structures that direct flowing water to a collection site. Groundwater, on the other hand, exists under the Earth’s surface in aquifers, which are permeable rock formations that can be drilled into and pumped for water.
For centuries, humans drew freshwater from surface and groundwater sources with minimal concerns for sustainability. Populations were many times smaller and technological limitations prevented unsustainable levels of extraction. Precipitation could replenish these sources much faster than they were used.
In modern times, freshwater resources are becoming stretched thin. In 2018, 16 countries (representing 552M people) withdrew freshwater at a rate that exceeded their internal renewable water resources (IRWR), which is defined as the long-term average annual flow of rivers and recharge of aquifers generated from endogenous precipitation. Further, there are 36 countries (2.3B people) with withdrawal rates that exceeded 50% of their IRWR and 58 countries (4.9B people) with withdrawal rates that exceeded 25% of their IRWR.5 Any rate above 25% is considered a water-stressed region and could put millions at risk. It might also result in over-extraction which can deplete water resources permanently.6 For example, the over-extraction of aquifers can result in detrimental saltwater infiltration. In short, in many regions around the world water usage is becoming unsustainable as water demand rises.
Making matters worse, freshwater supply could be threatened by climate change. Rising global temperatures accelerate extreme weather events like heatwaves that cause draught conditions, and powerful storms that can damage water infrastructure or overwhelm sewage operations, contaminating the water supply. A NASA study predicts that a mega-drought, one lasting more than three decades, is increasingly likely to hit the US Southwest and Central Plains regions. On our current greenhouse gas emissions trajectory, the odds of a mega-drought are as high as 80% by the later half of this century.7
So, what is the solution? First and foremost, finding new sources of freshwater is paramount. Desalination of abundant seawater presents one potential option, particularly for coastal regions. For many years, desalination was too expensive to be viable and there was limited supportive infrastructure. But in the past three decades, the cost of desalination fell 50%, while the volume of freshwater produced by the process rose by 320%.8,9
Seawater makes up 97.2% of all water on earth and continued cost improvements to reverse osmosis desalination technology could turn the tides in the global fight against water scarcity.10 Other potential freshwater sources include rainwater and fog harvesting, though neither have yet to see widespread adoption.
Next, enhancements must be made to existing water extraction approaches and operations. Disruptive tech-based solutions like connected sensors and artificial intelligence can monitor aquifers and surface sources in real time. Supervisory, control, and data acquisition (SCADA) systems, for example, measure water levels, monitor wells for infiltrations, and automate pumping.11 Implementing these types of technologies can help mitigate irreparable damage to global water resources.
NEXT-GEN INFRASTRUCTURE & TECHNOLOGY CAN IMPROVE WATER QUALITY
Over a decade ago, the United Nations General Assembly recognized access to clean water and sanitation as a human right. Despite this proclamation, water-related disease continues to be a leading cause of illness and in 2019 likely contributed to an alarming 2.7% of all global deaths.12
Inadequate access to safely managed drinking water is the primary culprit: 2.2B people lack access to safely managed drinking water, about 580M of which drink from unprotected surface sources like lakes, ponds, and wells.13 The World Health Organization defines safely managed drinking water as “an improved drinking water source which is located on premises, available when needed, and free of fecal and priority chemical contamination.”14 Water treatment and distribution are key enablers of this within the clean water cycle.
Water treatment is the process of bringing raw freshwater up to safe standards for its end-use, which in most cases is drinking water. Conventional treatment for drinking water is as follows:
Coagulation/Flocculation: Chemicals with positive charges like aluminum sulphate and ferric sulphate are added to the water, forcing small suspended and dissolved particles to bind, or coagulate, into larger particles called flocs.
Sedimentation: The water sits in a sedimentation tank until the flocs settle at bottom as sediment. Particle settling times vary, requiring further steps to remove lighter particles like viruses and certain minerals (ions).
Filtration: After sediment is removed, the water is filtered through porous media to remove particulate. This can be a multistep process that starts with large filtration through sand, gravel, and porous fibers and end with innovative filtration techniques like nano filtration and reverse osmosis.
Disinfection: Prior to distribution, the water is disinfected to kill any remaining micro-organisms. Most commonly, chlorine, chloramines, and carbon dioxide are used due to their cost-effectiveness.
Once treated, water needs to be distributed safely and efficiently to its end-users. In populated areas of advanced economies, treated water is often pumped into an elevated tank, which then provides pressurized water across an underground pipe network. Yet in many cases, this infrastructure has been neglected, resulting in wasteful and dangerous practices. In the United States, an estimated $7.6B of treated drinking water was lost in 2019 due to leaky pipes – a figure that could double to $16.7B by 2039 without substantial investment.15 And worse, 6-10 million people in the US still receive their drinking water through lead pipes and service lines, which is poisonous and can cause developmental issues in children and reduced cardiovascular and kidney functions in adults. These shortcomings resulted in a C- grade for the US’s drinking water infrastructure from the American Society of Civil Engineers and is a leading reason for President Biden including $111B in proposed funding for water systems in his American Jobs Plan.16 Beyond the borders of the US, many other developed nations face similar treatment and distribution issues, but the situation is often even more dire in developing markets, where water distribution can be much less safe or efficient, or even non-existent.
Technological advancements in water treatment tend to focus on improved methods for removing contaminates – either doing so more efficiently or relying less on chemicals additives. Such technologies include membrane filtration, ultraviolet irradiation, and nanoparticle purification.17 The latest in water distribution technologies allow for real time monitoring of quality and usage rates, AI-based forecasting of future demand trends, and dynamic adjustments to water networks to meet these needs. Ultimately, upgrading water treatment and improving distribution via the latest technologies could result in much more efficient, safe, and resilient water systems.
WATER USE – CLOSING THE SPIGOT
From 2002 to 2017, the global population increased 21% to 7.6B people and municipal and agricultural water withdrawals increased by 12%.18 Water demand increasing at a slower rate than population growth is ostensibly a sign of greater water usage efficiency, but overall population growth continues to pressure systems worldwide.
BRICs= Brazil, Russia, India, and China
Globally, 71% of freshwater is used for agricultural purposes, whereas roughly 17% is used by industry, and 12% for households.19 Growing populations alongside a quickly rising middle class in emerging markets are resulting in rising demand for water-intensive agricultural products like crops, meat, and dairy. It is expected that by 2050, total water usage will increase 15% above today’s levels to serve approximately 9 billion people around the world.20
Fortunately, water usage can continue to become more efficient per capita to alleviate the pressures of population and economic growth. At a local level, implementing water preservation-focused policies, like banning lawn watering during mid-day when evaporation is at its peak, establishing building codes that require low-flow toilets, faucets, and showerheads, and dynamic and tiered pricing, can all help reduce consumption patterns. In addition, the further adoption of cutting-edge technologies in agriculture like precision irrigation, indoor farming, and crop modification can further reduce water usage, while maintaining similar levels of food production.
WASTEWATER MANAGEMENT AND REUSE
The world is a closed system – every drop of water used to shower in the morning, grow a stalk of corn, or cool a data center ultimately finds its way back to the ecosystem. Much is evaporated in the atmosphere and through precipitation returns to the earth, but stormwater, domestic sewage, and industrial wastewater accumulate in vast quantities that require infrastructure and treatment processes to safely manage.
Municipal wastewater is typically collected through combined sewer systems which merge stormwater and domestic sewage through underground pipes. This water is then brought to a treatment plants which conduct two stages of treatment:
Primary Treatment: Solid materials are removed by screening and filtering large objects or grinding materials into smaller fragments. The water then sits in tanks where remaining solid materials either float to the top or fall to the bottom as sediment, which is then removed.
Secondary Treatment: Secondary treatment seeks to purify the water further by removing soluble organic matter. This stage of treatment utilizes bacteria to breakdown organic matter, before being treated with chlorine to disinfect the water. The water is then dechlorinated to remove chemicals before being pumped to surface water sources.21
Agricultural and industrial wastewater treatment processes differ from this and are often more challenging as they must safely remove chemicals and other inorganic pollutants. As suspected, this process of collecting and treating wastewater is costly – at least in a vacuum where public health and environmental damage is not being factored in – and therefore is often unavailable in poorer regions. Globally, it is expected that 80% wastewater returns to the ecosystem without receiving any treatment, endangering approximately 1.8 billion people who risk contracting cholera, dysentery, typhoid and polio by drawing water from these polluted systems.22
For many areas, the answer to these challenges is simply more funding to build adequate sewage and wastewater treatment facilities. For existing infrastructure, however, there are still several improvements that should be implemented, including increased capacity and resilience to handle powerful storms that often overwhelm systems, retrofitting facilities for greater electric efficiency (which can reduce operating costs and capture geothermal energy), replacing chlorine treatments with ultraviolet disinfection techniques, and integrating greater automation and software in daily operations.
AQWA – PROVIDING EXPOSURE TO THE GLOBAL CLEAN WATER VALUE CHAIN
The Global X Clean Water ETF (AQWA) is designed to provide investors efficient and targeted exposure to several aspects of the global clean water chain that we believe will both benefit from increased funding for water infrastructure and solutions, and play critical roles in addressing the global water crisis. This includes companies that derive at least 50% of their revenues, operating income, or assets from:
Industrial water treatment, recycling (including water reclamation), purification, and conservation
Water storage, transportation, metering, and distribution infrastructure
Production of household and commercial water purifier and heating products
Provision of consulting services identifying and implementing water efficiency strategies at the corporate and/ or municipal levels
Beyond selecting companies based on their pure-play exposure to the clean water value chain, AQWA’s underlying index also incorporates Environmental, Social & Governance (ESG) screens into its selection process to avoid potential bad actors in the space and AQWA follows ESG proxy voting guidelines to affect positive change alongside financial returns.
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>>> The World's First Small Nuclear Reactor Is Now Under Construction
https://www.zerohedge.com/energy/worlds-first-small-nuclear-reactor-now-under-construction
China National Nuclear Corporation (CNNC) launched on Tuesday the construction of the first onshore small nuclear reactor in the world, in its efforts to gain a leading position in the modular reactors market.
Construction began on the demonstration project at the Changjiang Nuclear Power Plant in the Hainan province in southern China, local publication Global Times reports.
The start of the construction for the ‘Linglong One’ small nuclear reactor comes four years later than initially planned, due to delays in regulatory clearances, Reuters notes.
The small reactor was originally planned to see the start of the construction phase in 2017.
A year earlier, the Linglong One small reactor had become the first to pass a safety review from the International Atomic Energy Agency (IAEA).
Once completed and commissioned, the small nuclear reactor is expected to meet the annual power needs of around 526,000 households, Global Times reports, without giving a timeline for the completion.
CNNC has been developing small reactor technology for the past ten years, the outlet says.
According to the World Nuclear Association, interest is growing in small and simpler technology to generate nuclear power, due to lower costs and the desire to provide power away from large grid systems.
“Overall SMR research and development in China is very active, with vigorous competition among companies encouraging innovation,” the association says, noting that the U.S., the UK, and Canada also develop and support their respective domestic small reactor technology.
In the United States, Advanced Small Modular Reactors (SMRs) are a key part of the Department of Energy’s goal to develop safe, clean, and affordable nuclear power options, DOE says. The Department has provided support to the development of light water-cooled SMRs, which are under licensing review by the Nuclear Regulatory Commission (NRC) and will likely be deployed in the late 2020s to early 2030s.
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Essential Utilities (WTRG) - >>> 3 Stocks You Can Buy and Hold Forever
Motley Fool
June 4, 2021
https://www.fool.com/investing/2021/06/04/3-stocks-you-can-buy-and-hold-forever/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Essential Utilities (NYSE:WTRG) is a regulated water and natural gas utility provider with roughly 5 million customers in 10 states. This business isn't very exciting, but it's a stable cash-flow investment that should chug along comfortably for years.
The company grew substantially through a major acquisition last year, but it looks set to grow 5% to 7% annually through 2023. Essential Utilities operates in regulated markets, so the rates it can charge customers are visible to the public. Regulation and the nature of utility infrastructure also make it very difficult for competitors to disrupt incumbents. These characteristics make this a really stable and reliable stock, which is perfect for dividend investors.
Essential Utilities pays a 2.1% dividend yield, which is fairly attractive in today's environment. That's especially strong when you consider the additional risk assumed by higher-yield stocks in the energy or real estate sectors, for example. Essential Utilities is moving along with a 60% payout ratio, indicating that the company produces more than enough profit to sustain and grow its dividend. Given the reliable growth forecasts for the medium term, this is a stable income investment. It won't deliver huge growth, but it will continue to kick off cash.
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Wind turbine sector freezing up and taking
out so much electricity
production triggered the start
of trying to do the rolling
black outs that turned into
a bigger problem...
Start with the problem first...
Which is known...
Before blaming rest of problem
on systems that normally would
not have seen so many problems
without the bad egg...
Any high fives for the industry
delivering natural gas to retail
customers being seen?...
So we watch...LJ
>>> In Texas’s Black-Swan Blackout, Everything Went Wrong at Once
Bloomberg
Rachel Adams-Heard, Naureen S. Malik and Brian Eckhouse
https://www.msn.com/en-us/money/markets/in-texass-black-swan-blackout-everything-went-wrong-at-once/ar-BB1dK2WJ?li=BBnb7Kz
(Bloomberg) -- The finger-pointing began immediately: It was the frozen wind turbines that foolishly replaced traditional sources. No, fossil fuels were at fault. No, Texas’s deregulated power market, unique in the country, had allowed companies to skimp on maintenance and upgrades.
As the hours ticked by and millions more were plunged into frozen darkness, a more sober reality emerged. The greatest forced blackout in U.S. history, as this event has almost certainly become, was the result of a systemic and multifaceted failure. There are no promises of when power will be restored and little likelihood that the episode won’t be repeated in a corner of the country hard hit by climate change.
“This feels like a technical design failure,” said Michael Webber, who founded the Webber Energy Group at the University of Texas at Austin and serves as chief science and technology officer at French utility Engie.
Power plants weren’t fully weatherized, wiping out generation capacity. The ones that were still standing struggled to get enough fuel, with shale wells experiencing so-called freeze-offs. Many wind turbines stopped spinning. Texas, with a grid notoriously isolated from the rest of the U.S., was unable to call on neighboring states for help.
Still, as the pressure dropped last week and frigid air descended from the north, some saw what was coming and felt like they were witnessing a train crash. They lay part of the blame on Ercot, the Electric Reliability Council of Texas, which manages the flow of power to consumers and says the extreme nature of the weather made it hard to be ready.
“We were woefully unprepared for this kind of cold,” said Texas State Representative Ron Reynolds, whose own house is without power. “They got caught with their pants down and now millions of Texans have no power. This is a matter of life and death.”
Adam Sinn, owner of Aspire Commodities LLC, a power and gas trader, was one of those wondering why so little was being done. He said that a week ago, when the seven-day outlook hit, Ercot’s own projections showed too little supply to meet soaring demand.
“We were looking at this week thinking, they are going to have to cut 10,000 megawatts of consumers,” he said. “I really think Ercot is to blame on this one.” He said there were spare megawatts that weren’t brought online. For example, Vistra Corp., a large generator, had 4,000 megawatts off line for maintenance in four plants that could have been turned on quickly, he said, citing data from Genscape Inc.
Sinn said either Ercot failed to order the megawatts back on or was told no, which should have generated publicity so residents could prepare.
Ercot and Genscape didn’t respond to requests for comment. Vistra declined to comment.
If Ercot knew what was in store, it wasn’t apparent in its messaging to Texans. Over the weekend, recommendations from its official Twitter account included closing the blinds and unplugging unused kitchen gadgets. “Laundry on Valentine’s Day?” it said in another post. “No.”
On Tuesday, Dan Woodfin, a senior director for Ercot, attributed the main factors to frozen instruments at natural gas, coal and nuclear plants. He and other Ercot officials said they believed generators had prepared better for such cold.
Ercot’s authority is somewhat limited. In 2011, the last time freezing weather caused rolling outages, it released best practices for power generators to follow, but it couldn’t require anything, said Adrian Shelley, Texas office director of Public Citizen, an advocacy group.
Federal energy regulators also issued a 357-page report that recommended generators winterize their equipment, including insulating pipes.
“The financial incentive isn’t there to harden that infrastructure,” he added. “From a generator perspective, the only incentive is to bring energy to market as cheaply as possible.”
Power prices spiked on several days to the price cap in Texas -- a staggering $9,000 a megawatt-hour.
A 100-megawatt wind farm in the state that might have normally made almost $40,000 over a two-day period in February could reap more than $9.5 million on Monday and Tuesday alone, Nicholas Steckler, a power-markets analyst at BloombergNEF, said. On Monday, electricity sales likely totaled $10 billion, according to Wood Mackenzie.
While some pointed to wind power as a culprit, as of early Tuesday wind shutdowns accounted for 3.6 to 4.5 gigawatts -- or less than 13% -- of the 30 to 35 gigawatts of total outages, Ercot’s Woodfin said. Gas produced 35% of the power in January.
Others said Texas’s problems were wide-ranging.
“Everyone wants to blame someone, so they blame Ercot,” Webber said. “But if the gas can’t come out of the ground, is that Ercot’s fault? If we have sloppy building codes that don’t properly insulate homes, is that Ercot’s fault?”
He suggests a combination of upgrades and expansions nationally at a cost of trillions of dollars over decades. Roughly 10% of that will need to take place in Texas. That’s a lot of money, which is why little was done the last time Texas saw a major test of its grid in the cold a decade ago.
Texas lacks the long-term planning processes that other parts of the country employ. In the east, grid operators run capacity markets that act like insurance policies. Generators are paid to guarantee that their supplies will be available on the most extreme hot and cold days. If they don’t show up, they face stiff penalties. Texas has instead left it up to prevailing prices and industry.
That deregulated and competitive nature of the markets stands to exacerbate massive price run-ups. More than 100 electric suppliers compete for customers who churn power companies like credit cards. They take big risks to attract new customers, offering incredibly low rates and allowing unlimited power use on weekends. But when the wholesale markets backfire, they bail on them.
The state also refuses to connect its grid with neighbors in part out of fear that the system will fall under federal oversight and regulation. But its politicians are coming to realize that independence has a down side.
Natural gas played an outsize role in the disaster. As early as last Thursday, Energy Transfer LP sent a warning to customers on its Transwestern natural gas pipeline: It was going to be cold, and if producers’ shipments were to deviate from their normally scheduled flows, they needed to let the operator know.
Maybe the North Dakota oil field could withstand frigid temperatures, but the infrastructure that connects the Permian Basin in West Texas and southeastern New Mexico is exposed to the elements. Drilling liquids freeze inside pipes, forcing wells and gas processing plants shut.
By Friday, temperatures had dropped to 24 degrees in Dallas. Texans were told to start conserving energy. Physical gas prices soared to more than $500 in Oklahoma from less than $4 at the start of the week. As of Tuesday, they had doubled to roughly $1,000 per million British thermal units. Texas Governor Greg Abbott asked a major gas exporter to limit their intake.
All of this is to speak nothing of the human toll.
“It’s mentally draining, the constant thought of wondering, ‘When will the power come back on, how can I get us out of this situation?’” said Alton McCarver, a 30-year-old IT worker, who led his family into his Dodge Charger for hours at a time to blast the heater and charge phones. “It’s been an uphill battle to stay warm.”
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>>> Investors Have Shunned Utilities Despite Their Steady Dividends. Here Are 6 to Consider for Yield.
Barron's
By Lawrence C. Strauss
Feb. 5, 2021
https://www.barrons.com/articles/investors-have-shunned-utilities-despite-their-steady-dividends-here-are-6-to-consider-for-yield-51612522801?siteid=yhoof2
Many utility stocks have remained unloved through much of the pandemic, their attractive yields and reliable dividends notwithstanding.
The Utilities Select Sector SPDR Fund (ticker: XLU), a good proxy for larger-cap businesses in that sector, has a one-year return of about minus 6%, versus plus 20% for the S&P 500.
Still, earnings, which help fuel dividends, are holding up for most utilities. And the utility stocks in the S&P 500 were recently yielding about 3.2%, compared with around 1.5% for the broader market.
The consensus FactSet 2021 earnings estimate for the Utilities Select Sector SPDR was recently $3.35 a share, down only 2% from $3.42 nearly a year ago. The recent estimate for the fund’s dividends per share was $2.08, versus $2.21 a year ago.
So why have investors kept away?
Morningstar analyst Charles Fishman says that utility stocks “were pretty pricey going into the pandemic” and cites that as “probably the main reason” for their underperformance since. The Utilities Select Sector SPDR Fund recently fetched nearly 20 times its projected 2021 earnings, compared with its five-year average of 18.3, according to FactSet.
Still, in a Jan. 22 note, Fishman wrote that he thought the utility sector was fairly valued. “Growth investments in renewable energy, grid modernization, and electric vehicles should outweigh higher regulatory, operational, and financial risk,” he observed, sizing up the recent change in presidential administrations. “We forecast that the U.S. utilities we cover will invest $656 billion over the next five years, more than consensus expects and up from the $541 billion spent in the past five years.”
In his view, that “supports our 5.5% average annual industry earnings growth outlook through 2024.”
Within the sector—known for steady but modest dividend increases—there are plenty of utilities that have boosted their recent payouts at a high single-digit or even a double-digit clip. A recent Barron’s screen highlighted some of those companies, including NextEra Energy (NEE), whose assets include the regulated Florida Power & Light utility as well a growing renewable energy business.
From 2017 through 2019, NextEra raised its disbursement at an annualized rate of around 13% from $3.93 a share to $5. Last year it was boosted to $5.60 a share, or $1.40 following a stock split last fall. The stock was recently yielding 1.6%, about half the average for the sector.
But the stock is expensive, recently trading at 37.6 times estimates 2021 profits.
“The valuation is pricey, but it is a great company,” says John Bartlett, a portfolio manager and analyst at Reaves Asset Management. “The market’s not stupid.”
There have been a few exceptions for utility dividends. One is Dominion Energy (D), which had to lower its dividend last year after it divested itself of its storage and gas-transmission assets, notably pipelines, to Berkshire Hathaway Energy for $9.7 billion.
Another is CenterPoint Energy (CNP), a utility holding company that last year ended up slashing its quarterly dividend to 15 cents a share from 29 cents. The company had a stake in a master limited partnership that also cut its dividend. CenterPoint Energy’s stock, which yields 3%, has a one-year return of minus 16%.
But as our screen found, there are a number of utilities that have been boosting their dividends by at least 6% annually and often higher: American Water Works (AWK), Atmos Energy (ATO), CMS Energy (CMS), DTE Energy (DTE), and Sempra Energy (SRE).
With dividend increases like that, investors should consider utilities for some downside protection.
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NextEra Energy - >>> Dividend growth you can bank on
https://www.fool.com/investing/2020/10/31/worried-about-a-stock-market-crash-buy-these-reces/
NextEra Energy (NYSE:NEE) is an incredible dividend stock to own at all times, as it offers the stability that comes with utility stocks -- much sought after during a recession -- as well as solid growth potential to power up your portfolio.
NextEra's core business includes its two electric companies that provide electricity to more than 5 million customers in Florida. It's a typical utility business with regulated revenues and stable cash flows.
NextEra's clean energy business, NextEra Energy Resources, is where the growth potential lies -- it's already the world's largest producer of wind and solar energy. Scaling up its clean-energy portfolio should lower costs and boost earnings for the company, supporting stronger dividend growth in the years to come.
In the past, NextEra's dividends grew at a compound annual rate of 9.4% between 2004 and 2019, driven by annualized growth of 8.4% in its adjusted earnings per share (EPS). NextEra's dividends have historically grown pretty much in-line with earnings, which means management's medium-term financial goal of growing adjusted EPS by high-single-digit percentages through 2023 should be followed with similar dividend raises.
The trend, in fact, should continue well beyond 2023, as the renewable energy industry is expected to attract investments worth trillions of dollars in coming decades as the adoption of clean energy gathers steam. NextEra is well poised to exploit any opportunity -- its renewables backlog in the latest quarter crossed 15 gigawatts, which is larger than the company's existing renewable capacity. If you let NextEra's modest dividend yield of 1.9% deter you, you could miss out on solid potential stock price gains backed by dividend growth.
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>>> Is Duke Energy Stock a Buy?
Is Duke Energy stock even more attractive after rebuffing a takeover offer from NextEra Energy?
Motley Fool
by Neha Chamaria
Oct 30, 2020
https://www.fool.com/investing/2020/10/30/is-duke-energy-stock-a-buy/
Duke Energy (NYSE:DUK) bulls got a major kickoff recently after reports of a potential takeover by NextEra Energy (NYSE:NEE) emerged. Duke shares soared on the news given NextEra's clout in the utility sector: It's the world's largest publicly listed utility, with a market capitalization more than twice Duke's.
The drama didn't last long, however. Duke promptly rebuffed NextEra's proposal and the latter quickly ruled out hostile takeovers. That's left investors with a lingering question: Is Duke stock worth buying at its current price? Yes, if you must, but buy this utility stock for better reasons than speculation about a potential merger or acquisition.
Stability with embedded earnings growth
Stable revenue and cash flows are high on a long-term investor's priority list when picking a stock. Duke easily passes the test: It's a 95% regulated electric and gas utility.
What does that mean?
A regulated utility enjoys monopoly status in the regions it serves since it owns all local power generation, transmission, and distribution lines. Duke provides electricity to 7.7 million customers in six states -- North Carolina, South Carolina, Kentucky, Florida, Ohio, and Indiana -- and natural gas to more than 1.6 million customers in Ohio, Kentucky, Tennessee, and the Carolinas.
More importantly, state public utility commissions fix regulated utility rates, eliminating much of the volatility usually associated with a business' revenue and cash flows. Electricity and gas are essential services. Duke Energy is thus a great defensive, or even recession-proof, stock.
So if rates are fixed by regulators, how does Duke grow? Duke regularly bids for rate hikes. To win timely approvals, it has to modernize and upgrade its grid infrastructure to convince regulators that it can offer a steady supply of power in the future. The growth in Duke's cash flows so far reflects its efficiency on this front.
Duke is confident that its planned spending of $58 billion through 2024 should bring about 6% compound annual growth rate (CAGR) and support earnings-per-share growth of 4%-6%. Earnings could grow by 7% CAGR in the second half of the decade, thanks to Duke's just-launched clean energy program. That's another reason why I'm bullish about the stock.
Big bets on the future of energy
Earlier in October, Duke announced aggressive plans to scale up its clean energy portfolio. Goals include:
Doubling its renewables portfolio capacity to 16 gigawatts by 2025.
Retiring all coal-only units in the Carolinas by 2030.
Cutting carbon emission from electricity generation by at least 50% by 2030.
Spending $65 billion-$75 billion between 2025 and 2029, with a focus on clean energy projects.
Converting 100% of its light-duty fleet to electric vehicles by 2030.
By 2050, Duke expects renewables to be its largest source of energy. Focus is on solar and wind energy, as well as battery storage. I didn't consider Duke stock to be a great buy earlier this year partly because of its underwhelming clean energy approach. I also thought it was a bad buy because of its involvement with the Atlantic Coast Pipeline (ACP) project that also drew Dominion Energy and The Southern Company. The project was tangled in time and cost overruns and was putting immense pressure on Duke's balance sheet.
In July, Duke and Dominion canceled ACP. While that means loss of potential earnings from the ambitious project, Duke is now redirecting the incremental capital expenditure that would've gone to ACP to clean energy projects. It's a move in the right direction when you weigh ACP's risks against clean energy's rewards. It is, in fact, imperative for Duke to ditch coal and adopt clean energy in earnest at a time when companies like NextEra Energy are making huge strides in renewable energy. Duke's latest clean energy goals are encouraging and should help lower costs and boost earnings. That's good news for income investors as well.
Stable and rising dividends to bank on
Duke is a great dividend stock. It's paid a dividend every year for 94 years and has increased dividends for 14 consecutive years. Its last dividend raise in July was a modest 2% given the challenging macro environment, but management also hopes to align its payout ratio to a more comfortable 65% to 75%. That payout looks sustainable and leaves enough room for Duke's dividends to grow.
Yearly annual dividend increases have contributed immensely to Duke's stock price performance over the years. Also, Duke's dividend yield of 4.2%, while at par with similar-sized rivals, trumps NextEra's tiny 1.7% yield.
Duke's shares may appear a bit pricey currently, but its regulated business, focus on clean energy, and potential earnings and dividend growth make it a great recession-resilient stock to own in such volatile times.
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>>> Duke Energy (DUK) Announces Long-Term Clean Energy Plan
Zacks
October 12, 2020
https://finance.yahoo.com/news/duke-energy-duk-announces-long-151103122.html
Duke Energy Corp. DUK recently unveiled its long-term investment plan along with increasing its current five-year capital target and clean energy projections at the company’s inaugural environmental, social and governance (ESG) day. This comes at a high time when a handful of Utilities across the board are steadily ramping up their carbon-dioxide (CO2) emission reduction goals.
The company now forecasts that its current five-year capital plan will increase by about $2 billion to approximately $58 billion.
Details of the Long-Term Plan
Duke Energy’s recently-announced plan includes acceleration of coal plant retirements in addition to the 50 coal units with capacity worth more than 6,500 megawatts (MW), which it already retired since 2010. The company aims to retire all coal-only units in the Carolinas and reduce methane emissions in its natural gas business to netzero by 2030.
In terms of promoting clean energy, the company now targets to bring its regulated renewable capacity total to 40 gigawatts (GW) by 2050.It also aims to add more than 11,000 MW of energy storage to its system by 2050.
For such clean energy expansion, Duke Energy aims to spend capital in the range of $65-$75 billion during the 2025-2029 period. Such clean energy transition will enable the company to increase its earnings at the upper end of its current long-term adjusted EPS growth rate of 4-6% through 2024.
Factors Driving Decarbonization
In the United States, most utilities significantly lowered their CO2 emissions since 2005. This was possible owing to sustained low natural gas prices and declining costs for renewable generation alongside technological innovations that promoted energy storage.
Also, improvements in power plant efficiency and shifts in investments towards clean energy within the power sector have been boosting decarbonization for a while now. Further, state energy policies like renewable standard portfolio as well as subsidies offered by the government like production and investment tax credits helped utilities expedited their carbon footprint reduction activity.
Duke Energy’s Decarbonization Progress
We believe, the aforementioned factors must have enabled Duke Energy to adopt aggressive decarbonisation goals in recent times. In fact the latest announcement comes only a month after Duke Energy Carolina submitted its 2020 Integrated Resource Plan (IRP), which included for the first time potential pathways to achieve up to 70% carbon emissions reduction with policy and technology advancements.
Therefore we may expect this IRP and the latest long-term plans provided by the company to duly achieve its earlier set goal of CO2 reduction by at least 50% by 2030 and the long-term target of reaching the net-zero level by 2050 in the Carolinas.
Other Utilities Following Suit
Edison International’s EIX subsidiary Southern California Edison (SCE) provided 48% carbon-free electricity to customers in 2019. The company aims at achieving 100% carbon-free electricity by 2045. Earlier in June, management updated that the company has already touched nearly 50% of its 2045 carbon-free energy goal.
In August, NextEra Energy’s NEE subsidiary NextEra Energy Resources announced plans to add 700 megawatt (MWs) of fully-contracted battery storage projects in California by 2022. Such investments will assist NextEra Energy in realizing its alternate energy production goal and lowering carbon emissions from the production process.
Xcel Energy XEL was the first major U.S electricity provider with a vision to serve customers with 100% carbon-free electricity by 2050 and to curb carbon emissions by up to 80% by 2030 from the 2005 levels. The company recorded its largest one-year decline in carbon emissions during 2019, reducing carbon emissions by 44%.
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>>> NextEra Energy Doesn't Need Duke Energy to Thrive
Reports of a rebuffed merger proposal shouldn't bother investors in the renewable energy giant.
Motley Fool
Matthew DiLallo
Oct 6, 2020
https://www.fool.com/investing/2020/10/06/nextera-energy-doesnt-need-duke-energy-to-thrive/
NextEra Energy (NYSE:NEE) made headlines last week by reportedly approaching rival utility Duke Energy (NYSE:DUK) with a takeover offer. While Duke rejected the initial deal, it left the door open for a potential union.
On one hand, a strategic combination between Duke and NextEra Energy would make lots of strategic sense. It would create a mega-utility with the scale to accelerate the country's transition to renewable energy. However, while the deal would amp up the combined company's growth prospects, NextEra doesn't need Duke to generate strong returns for its investors. So they shouldn't fret if the company walks away from these talks.
The merger makes sense on many levels
NextEra is already one of the largest and most valuable energy companies in the country as it recently passed oil giant ExxonMobil in market capitalization. A combination with Duke Energy, which has a more than $60 billion market cap, would push NextEra's market value to around $200 billion. That increased scale would enable the combined company to reduce costs and capture even more expansion opportunities in the future.
The proposed combination would join Florida's biggest electric utility in NextEra (which owns Florida Power & Light and Gulf Power) with Duke's diversified operations that include utilities in Florida, North Carolina, South Carolina, Indiana, Ohio, and Kentucky. Thus, the deal would enhance NextEra's leading position in Florida while expanding its reach to five more states. Duke's presence in South Carolina is noteworthy since NextEra is working with its government to take over beleaguered public utility Santee Cooper.
If it brought Duke into the fold, NextEra could implement its successful integration program, which has enabled it to create significant value from prior acquisitions. For example, the company expects its 2019 Gulf Power deal to add $0.15 per share to its bottom line this year and another $0.20 per share in 2021. Given Duke's size and the potential synergies, that deal could be even more accretive to earnings as long as it doesn't overpay. One of the drivers would be its ability to accelerate Duke's transition to cheaper renewable energy by replacing its legacy coal plants with new wind and solar facilities.
The go-it-alone strategy is more than fine
While a deal with Duke could supercharge NextEra Energy's earnings growth, it doesn't need this combination to succeed. That's clear by the company's recently updated growth forecast, where it boosted and extended its outlook. Thanks to its strong execution and renewable energy development program, NextEra increased its 2021 earnings outlook by $0.20 per share (before factoring in its upcoming stock split). That's on top of the 6% to 8% growth it already anticipated and the $0.20 per share of earnings accretion from the Gulf Power deal. Overall, it sees next year's earnings coming in more than 10% above this year's results, which are on track to grow 7% from last year at the midpoint.
Meanwhile, the company expects to grow its earnings at 6% to 8% per year through at least 2023 off that higher projected 2021 base level. That forecast gives the company increasing confidence that it can deliver dividend growth of around 10% annually through at least 2022.
That earnings growth pace is impressive for a company of its size in the slow-growing utility sector. However, it's par for the course for NextEra Energy, which has historically grown its earnings at an above-average pace. For example, since 2004, the company has expanded its adjusted earnings per share at an 8.4% compound annual rate. That has given the utility the power to generate market-crushing total returns. Over the last decade, it has produced a 530% total shareholder return, which clobbered both the S&P 500 (257%) and the S&P 500 utility index (205%).
Given that historical outperformance, NextEra's outlook suggests it's poised to continue producing market-beating total returns over the next several years. Thus, it clearly doesn't need Duke to deliver above-average growth and returns. However, if it can buy its rival at a fair price, it could potentially enhance its already attractive long-term growth prospects.
NextEra wins even if it loses out on Duke Energy
There's a lot to like about NextEra's proposed strategic combination with Duke. However, it doesn't need to acquire Duke to be successful since its current path could see it produce above-average earnings growth and total returns. So investors shouldn't fret if merger talks go nowhere since that would be a much better outcome than if it overpaid to acquire Duke as that could water down its returns instead of enhancing them.
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>>> Atlantica Sustainable Infrastructure plc (AY) acquires, owns, and manages renewable energy, natural gas, transmission and transportation infrastructures, and water assets in the United States, Canada, Mexico, Peru, Chile, Uruguay, Spain, Algeria, and South Africa. It owns 25 assets comprising 1,496 MW of aggregate renewable energy installed generation capacity; 343 MW of natural gas-fired power generation capacity; 1,166 miles of electric transmission lines; and 10.5 million cubic feet per day of water desalination assets. The company was formerly known as Atlantica Yield plc and changed its name to Atlantica Sustainable Infrastructure plc in May 2020. Atlantica Sustainable Infrastructure plc was founded in 2013 and is based in Brentford, the United Kingdom.
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American Water Works - >>> 3 Stocks to Buy and Hold for the Next 50 Years
Only a handful of companies are as ready for the unknowns ahead as they are the knowns.
Motley Fool
James Brumley
Sep 24, 2020
https://www.fool.com/investing/2020/09/24/3-stocks-to-buy-and-hold-for-the-next-50-years/
In today's media-driven market, investors struggle to look more than 50 days down the road, let alone 50 years. But that's probably the timeframe most of us should be thinking about with our picks -- constantly swapping stocks in search of the next hot name can nickel and dime a portfolio to death.
To that end, investors with enough discipline (and time) to sit tight for the next 50 years may want to consider stepping into Microsoft (NASDAQ:MSFT), American Water Works Company (NYSE:AWK), and Verizon Communications (NYSE:VZ) sooner rather than later. In their own way, each offers something that will allow it to withstand the tough test of time.
Microsoft
Why it's built to last: Microsoft is entrenched into the tech we rely on every single day
A decade ago, software giant Microsoft looked like a has-been. It wasn't a player in the then-young smartphone market, free office productivity software was a threat to an important piece of its business, the personal computer market was peaking, and most of the world was still trying to figure out exactly what the term "cloud computing" even meant.
When Satya Nadella was named CEO in 2014, he addressed all of those challenges.
He didn't address all of them directly, to be clear. Microsoft is largely out of the smartphone business after its somewhat disastrous experiment in the arena. And, while the PC market's long contraction finally seems to be leveling off, the company doesn't seem to see its Windows operating system as a growth engine in and of itself. Rather, it's a clever means to an end. The Windows OS readily supports use of Microsoft's cloud-based office software Office 365, which is sold on a subscription basis rather than as a one-time purchase. During its most recent reported quarter, this online version of Office was being utilized by 42.7 million consumers and an untold number of businesses, making up the lion's share of $11.8 billion worth of recurring revenue collected by the company's Productivity and Business Processes arm.
Then there's the Microsoft you don't see. If you're a regular user of any cloud service, there's a good chance Microsoft's Azure is being used to help you digitally connect with a company's servers. Microsoft's Intelligent Cloud division produced revenue growth of 17% for the three-month stretch ending in June. A big chunk of that is recurring revenue as well. The company's cloud-management software, Azure, is the only one among the majors that grew market share during Q2, according to Canalys data.
Obviously competition exists, and markets change over time. Unless individuals and enterprises stop using technology, though -- and mobile technology in particular -- Microsoft's always going to have a market to sell something to.
American Water Works
Why it's built to last: Water utilities are practically a legal monopoly
The average person living in the U.S. consumes between 80 and 100 gallons of water per day, according to the United States Geological Survey Agency, with most of us not giving it a second thought. If we were to shut that water off for just a few hours, though, most of us would probably go mad due to sheer inconvenience! Consumers may postpone the purchase of a car or skip a vacation, but they're not going to live without water.
That reality puts water utility names like American Water Works in an enviable position, and the company's got the numbers to prove the power of this demand dynamic. In only two quarters of the past ten years has American Water Works reported year-over-year revenue declines. Ditto for gross profits, or what's left after paying for the purification and delivery of water through its pipe networks.
That consistent success has a lot to do with how the water utility business works. Most municipalities oversee local service providers, and approve any rate hikes. They rarely reject price increases, though. Water market industry researcher Circle of Blue notes that in every year since 2010, the average U.S. household's water bill has gone up. Theoretically, a competitor could step in and undercut an incumbent's rates. But transferring control of localized infrastructure can be more complex than it's worth.
There are several viable water utility stocks to choose from, but American Water Works is compelling because it's the biggest and can throw its weight around.
Verizon
Why it's built to last: New technologies perpetually offer Verizon something better to market
Finally, add telecom powerhouse Verizon to your list of stocks to sit on for 50 years or more.
It's admittedly a tough idea to embrace... on the surface. Telecom is essentially a commodity, and generally priced as such. That is to say, Verizon and its competitors sell the same basic product for about the same price.
Under the surface, though, telecom is anything but a simple commodity. Not only is there a limited amount of spectrum (radio frequencies needed to connect wireless devices to networks) to work with, new technologies are forever changing how telecom service works.
Case in point: 5G. Yes, wireless consumers are now offered 5G service, but that's not the company's 5G highlight. Verizon is thinking about far more powerful uses of this tech. For instance, earlier this month the company announced success with trials of 5G solutions optimized for use in facilities like hospitals, factories, and schools. With this ultra-high-speed wireless connectivity, the era of the Internet of Things can finally be ushered in as envisioned; complex and geographically sprawling organizations can manage all of their employees and equipment, and optimize them remotely. It even means wireless at-home broadband is now a viable option.
The thing is, 5G wasn't even on the radar a decade ago. There will always be something new to keep Verizon on the cutting edge of communications.
One could argue that rival AT&T is just as capable, but there's a stark difference between Verizon and AT&T. That is, AT&T remains deep in debt, and bogged down by the struggling DirecTV business it's reportedly trying to shed. It's also working hard to make the most of its 2018 acquisition of Warner Media, launching streaming platform HBO Max in May of this year. That's a big and somewhat distracting bet, though. Verizon is better off staying focused on doing one thing well, and not getting sucked into a brutal video entertainment war.
The dividend yield of 4.2% isn't too bad either, especially considering the company's raised it every year for the past 13 years.
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NextEra Energy - >>> Three Traits To Look for In A Starter Stock (and One to Avoid)
Finding a good starter stock can be overwhelming. Here's what to lookout for to make getting started easier.
Motley Fool
by Edward Ruger
Sep 18, 2020
https://www.fool.com/investing/2020/09/18/three-traits-to-look-for-in-a-starter-stock/
So you've opened a brokerage account, funded it, and are ready to find your first investment. It's easy to be overwhelmed by the hundreds of publicly traded companies out there. Not only is the sheer number of companies difficult to wade through, but the idea of making money fast is incredibly tempting.
Unfortunately, when you buy a company with the goal of doubling your investment in the short term, you are less of an investor and more of a gambler. These short-term plays are often incredibly risky, subpar businesses, and will ultimately burn you. Companies like these tend to appear incredibly cheap, and with good reason.
While different parts of a portfolio can accommodate more risky
investments, a starter stock should be held for the long term -- at least three to five years, or preferably longer. Your first company should be a cut above the rest, something to be proud of, but where do you start? Be on the lookout for these three traits:
Several stacks of coins lay in the dirt with small green plants growing from each coin stack.
1. Global trends will lift them higher
A starter stock should benefit from global trends into the future. NextEra Energy (NYSE:NEE)is a utility and wholesale power company that generates its electricity from renewables such as wind and solar. NextEra stands to benefit from the same trend (a push for renewable energy) that has steadily weakened ExxonMobil (NYSE:XOM), a company once seen as a prime candidate for any portfolio. You can rest easy when holding onto a starter stock with decades of growth ahead.
2. Recurring revenue
Recurring revenue is generated when a company sells to a client repeatedly, turning customers into cash cows year in and year out. Because companies who implement this model have a clear ability to determine future revenue, many of them are able to pay out dividends. Businesses with strong levels of recurring revenue can provide a level of safety for an investor's portfolio..
For example, NextEra Energy's electrical utility customers pay them month in and month out as residents tend to have little or no choice in electrical utility providers. This is very different from the commoditized model of ExxonMobil's gasoline -- which means customers will go wherever the gas is cheapest. The ability for repeat business is another instance where NextEra has Exxon beat.
3. A leader in its industry
A great starter company has a distinguished track record of innovation, marking it as a leader in its field. Companies that pivot with the times become the trendsetters of their industries, which in turn generates value for shareholders. A true leader is more than just the biggest company -- it's the one most willing to grow.
Back to our comparison: Exxon may have great name recognition, but it loses once again to NextEra. For example, scientists have known of global warming for decades, yet Exxon has made no fundamental changes to its business. By comparison, NextEra Energy started shifting more of its power portfolio toward renewables. Shareholders will continue to benefit from NextEra's ability to capitalize on opportunities early.
Don't limit yourself to bargain hunting
When starting to invest, it's easy to get sucked into a subpar company that is trading for a discount, but don't focus on the bargain bin. I love NextEra Energy as a starter company, but it is by no means cheap. However, it has earned that extra valuation due to a long runway for growth from global trends, strong recurring revenue, and a demonstrated ability to adapt. In the words of Warren Buffet, "it's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." Ultimately, you could do far worse than heed the words of the Oracle of Omaha.
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NextEra Energy - >>> Tesla and Apple Split Their Stocks. Now NextEra Energy Is Too.
Barron's
By Ben Levisohn
Sept. 16, 2020
https://www.barrons.com/articles/nextera-energy-stock-split-51600183333?siteid=yhoof2&yptr=yahoo
After Apple and Tesla announced stock splits—and subsequently saw their shares soar—observers said it was only a matter of time until others followed suit. Well, at least one other is following suit.
After yesterday’s close, NextEra Energy (ticker: NEE), a utility company, announced a four-for-one split, and also increased its guidance. “Each shareholder of record on Oct. 19, 2020, will receive three additional shares of common stock for each then-held share, to be distributed on Oct. 26, 2020,” the company said in a statement. “Trading will begin on a stock split-adjusted basis on Oct. 27, 2020.”
The stock closed up 4.9%, to $295.70, Tuesday. The S&P 500 was up 0.5%, and the Dow Jones Industrial Average was effectively flat. In premarket trading Wednesday, the stock was down 4.3%.
NextEra Energy now expects to earn between $9.60 and $10.15 in 2021, an increase of 20 cents over previous guidance. It also said it expects to grow by 6% to 8% in 2022 and 2023. NextEra credited “ongoing strength of the renewables development environment and the continued execution across all of its businesses” for the more optimistic outlook.
The guidance is great, but it’s the stock split that caught our attention. Apple (APPL) gained 34% from July 30, when it announced the split, through Aug. 31, when the split occurred. Tesla (TSLA) gained 81% from Aug. 11, when it announced its split, through Aug. 31, when it happened.
“Splits are just optics, but they can add to speculative frenzies,” Wolfe Research strategist Chris Senyek wrote in a Sept. 14 report. “Given the huge run-ups by Apple and Tesla following their recent split announcements, we expect many other companies with high share prices to follow suit—if the current bubble continues to build.”
Senyek, however, notes that companies that split their stocks underperform the median company in their industry after splitting their shares by an average of 2.2 percentage points over the 12 months following the split. Companies with high share prices—over $100—perform worse than stocks with lower prices, she adds.
That makes sense. If a stock runs up because of something that does nothing to change its fundamentals, it should give those gains back after the split. That’s what has happened with Apple and Tesla.
Might it happen to NextEra too?
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>>> Clearway Energy, Inc. (CWEN), through its subsidiaries, acquires, owns, and operates contracted renewable energy and conventional generation, and thermal infrastructure assets in the United States. As of December 31, 2018, it had contracted generation portfolio of 5,272 net megawatts (MWs) of wind, solar, and natural gas-fired power generation facilities, as well as district energy systems. The company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,385 net MW thermal equivalents; and electric generation capacity of 133 net MWs. Its thermal infrastructure assets provide steam, hot water and/or chilled water, and electricity to commercial businesses, universities, hospitals, and governmental units. The company was founded in 2012 and is based in Princeton, New Jersey. Clearway Energy, Inc. operates as a subsidiary of Clearway Energy Group LLC. <<<
>>> Clearway Energy – Major Dividend
For its second-quarter, Clearway Energy Inc (NYSE: CWEN) reported a net income of $76 million. Adjusted EBITDA was $316 million with $100 million in cash gained from operating activities. The renewable energy producer now yields 4.9% after providing its investors with a monster dividend increase this month. The company can easily support the higher payout thanks to its stability gained by long-term and fixed-rate contracts. Along with a solid financial profile, Clearway has the flexibility to make acquisitions. With several deals in the air, its cash flow could be further enhanced in the upcoming years. <<<
https://www.yahoo.com/news/whats-solar-energy-rundown-6-171355260.html
NextEra Energy - >>> Got $1,500? Here Are 3 of the Safest Stocks to Buy Now
These great companies haven't delivered a negative annual total return in over a decade.
Motley Fool
by Sean Williams
Aug 17, 2020
https://www.fool.com/investing/2020/08/17/got-1500-here-are-3-of-the-safest-stocks-to-buy-no/
Who needs amusement parks when you have the stock market to take you on a wild ride? The coronavirus disease 2019 (COVID-19) pandemic has led to unprecedented volatility this year, as measured by the CBOE Volatility Index. We witnessed the broad-based S&P 500 lose 34% of its value in less than five weeks, then regain everything back over the subsequent 140 calendar days.
Investors, both novice and tenured, have had their resolve to stay the course tested like never before.
Even though the stock market has a history of putting corrections and bear markets firmly into the rearview mirror over time, some investors simply aren't built or prepared to deal with wild swings in equity valuations or the potential for prolonged downside. To these folks I say, there's good news. There are a handful of companies that can be bought right now that are among the safest stocks on Wall Street.
Best of all, you won't need a fortune to begin investing in these tried-and-true businesses. If, say, you have $1,500 you can devote to these safe stocks over the long haul, you have more than enough capital to watch your wealth compound over time.
Costco Wholesale
Because of the retail industry's tie-ins to the U.S. economy, we wouldn't often think of retailers as a true safe-haven investment. Although the U.S. economy spends far more time expanding than contracting, recessions are an inevitable part of the economic cycle. However, recessions tend to be a virtual non-event for Costco Wholesale (NASDAQ:COST).
Just how steady is warehouse club Costco? Including its dividend, Costco hasn't delivered a negative total return since 2008. With its stock up 15.3% year-to-date, through August 13, Costco looks to be on track for a 12th consecutive year of gains, after delivering a 540% total return for investors during the 2010s.
A big reason Costco is able to separate itself from other retailers is because of its bulk-buying prowess. Costco frequently uses its size and deep pockets to negotiate significant discounts when buying items in bulk. These discounts can then be passed along to its members. And make no mistake about it, these low prices remain the primary draw of consumers to Costco.
Furthermore, Costco uses its memberships as a tool to fuel its competitive advantages. The revenue collected from these memberships can be used as a buffer on pricing to further undercut its competition. Additionally, having consumers pay annually for the right to shop at Costco makes it less likely that they're going to shop elsewhere. These memberships effectively lock consumers into Costco's ecosystem of products and services.
From what we've historically witnessed, Costco has excellent pricing power on its memberships. This is to say that any pushback on membership fee price hikes tends to be very short-lived, and rarely, if ever, adversely affects enrollments or renewals.
Since Costco carries everything from essential groceries to aisles upon aisles of higher-margin discretionary items, it makes for the perfect example of a safe stock to buy in the retail space.
Broadcom
Another one of the safest stocks on the planet than you can buy right now is chipmaker Broadcom (NASDAQ:AVGO).
Similar to Costco argument above, technology isn't exactly the sector that folks would typically look for "safe stocks." Tech stocks are usually very cyclical, and sport high premiums tied to their superior growth potential. In other words, we'd expect a lot of volatility. But that's really not been the case with Broadcom.
Throughout the 2010s, Broadcom's total return, inclusive of dividends, was positive every year -- and it's looking to keep that streak intact in 2020. Dividends have certainly helped Broadcom keep its streak of annual gains alive, with its quarterly payout of $3.25 having grown by more than 4,500% from where it was 10 years ago.
But Broadcom's income stream isn't the real lure here. Instead, it's two huge catalysts that should dominate this decade.
First off all, Broadcom is going to benefit from the rollout of 5G networks. We're talking about the first real upgrade to wireless infrastructure in about a decade, and it's liable to lead to a multiyear technology upgrade cycle for smartphones and other wireless devices. With wireless chips for smartphones accounting for the lion's share of the company's revenue, 5G should be a serious growth boon for Broadcom.
The other factor at play here is the surge in remote work environments created by COVID-19. As enterprise data continues to shift into the cloud, demand for data centers and storage should increase. Broadcom's connectivity and access chip solutions are at the heart of this growing data center demand.
Though its days of consistent double-digit sales growth are now in the past, Broadcom's current profile will check boxes for growth and value investors.
NextEra Energy
A final safe stock that investors can consider picking up right now is electric utility NextEra Energy (NYSE:NEE). If the company's nearly 19% total return holds for 2020, this'll mark its 12th straight positive year of returns.
When you think of safe, steady companies, utilities should rightly come to mind. That's because utilities provide a product or service that people almost universally need. In NextEra's case, it supplies electricity and natural gas, which are pretty much a necessity if you own a home or rent. Although weather can influence how much power a household uses, the beauty of investing in electric utility stocks is that demand and cash flow tend to be highly predictable in any economic environment.
What allows NextEra to stand out from its peers and deliver consistent high-single-digit profit growth is the company's focus on renewable energy. Investing in solar and wind projects isn't cheap, but NextEra has been able to do so at historically low lending rates for years. As the leading utility for solar and wind capacity, NextEra's electricity generation costs are well below that of its peers. If and when green energy regulations are handed down from Washington, D.C., NextEra will be way ahead of the curve.
NextEra Energy also benefits from its traditional utility operations being regulated. Though this means the company can't pass along price hikes at will (it needs the authorization of a state's public utility commission), it also means no exposure to potentially volatile wholesale electricity pricing. Again, it all comes back to the predictability of the company's cash flow.
NextEra might be trading at a premium to other electric utilities, but it's well-deserved given its ability to execute on its renewable projects.
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>>> Buy Utility Stocks Now, Goldman Sachs Says. They Could Be a Great Source of Dividends.
Barron's
By Lawrence C. Strauss
Updated Aug. 14, 2020
https://www.barrons.com/articles/unility-stocks-interest-rates-spread-income-investing-dividends-51597350732?siteid=yhoof2&yptr=yahoo
Energy is the worst-performing S&P 500 sector in 2020.
Utility stocks continue to lag behind the broader market, even though their earnings have been pretty durable.
For income investors, that is a double-edged sword. With bond yields so low, utilities stocks have been popular for income investors for a long time. Now, the spread between the sector’s yield and that of the 10-Year U.S. Treasury note is near a 25-year high, according to Goldman Sachs—3.2% versus 0.6% recently.
But the higher yields, which are attractive to income investors, also signify poor stock performance. The utility stocks in the S&P 500 have returned minus 6% this year, one of the more disappointing sector results. The S&P 500 has returned about 6% year to date.
Energy is the worst-performing S&P 500 sector in 2020, down about 37%, and financials have dropped about 18%. Utilities, meanwhile, underperformed earlier this year when the market sold off because of the pandemic, and have trailed behind during the subsequent rebound as well.
One potential silver lining: A Goldman Sachs research note points out that a yield spread this wide is generally followed by outperformance for utility stocks.
“Among defensive sectors, we recommend investors overweight Utilities given its high dividend yield and compelling valuation relative to interest rates,” according to the note. It said the sector’s 2021 earnings per share estimates have declined by 1%, the smallest cut among the S&P 500 sectors.
One thing to keep in mind is that utility-stock valuations remain pretty full. The Utilities Select Sector SPDR Fund (ticker: XLU) recently fetched about 19.5 times current-year earnings estimates, above its five-year average of about 18 times, according to FactSet.
“We have been negative on utilities for some time based on valuation,” said David Katz, chief investment officer at Matrix Asset Advisors in White Plains, N.Y. More recently, though, he has been warming to the sector. Katz said he recently started positions in Duke Energy (DUK) and Consolidated Edison (ED), among others.
Duke Energy has returned minus 6% this year. It yields 4.7%. Consolidated Edison, which yields 4.2%, has returned about minus 17% in 2020.
One utility that has bucked the underperformance trend is NextEra Energy (NEE), which has returned some 19% this year. It yields 2%. The company’s holdings include Florida Power & Light, a regulated utility, as well as wind- and solar-power assets.
The Utilities Select Sector SPDR Fund is down about 4% this year, including dividends.
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>>> Xcel Energy Inc. (XEL), through its subsidiaries, generates, purchases, transmits, distributes, and sells electricity. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The company generates electricity through coal, nuclear, natural gas, hydroelectric, solar, biomass, oil, wood/refuse, and wind energy sources. It also purchases, transports, distributes, and sells natural gas to retail customers, as well as transports customer-owned natural gas. In addition, the company develops and leases natural gas pipelines, and storage and compression facilities; and invests in rental housing projects, as well as procures equipment for construction of renewable generation facilities. It serves residential, commercial, and industrial customers in the portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. The company sells electricity to approximately 3.7 million customers; and natural gas to approximately 2.1 million customers. Xcel Energy Inc. was founded in 1909 and is headquartered in Minneapolis, Minnesota.
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NextEra Energy - >>> 3 Well-Known Stocks That Just Keep Winning
Based on year-to-date performance, these popular stocks are on track for their 12th consecutive year of gains.
Motley Fool
Sean Williams
Jul 9, 2020
https://finance.yahoo.com/m/680deaaa-297d-3ede-8a74-6eeccf305821/3-well-known-stocks-that-just.html?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article&yptr=yahoo
For Wall Street and investors, this has been one heck of a trying year. No matter your level of investing experience, nothing could have prepared folks for the roller-coaster ride the stock market has been on since mid-February due to the coronavirus disease 2019 (COVID-19) pandemic.
While most stocks have given investors a bit of whiplash -- which is to be expected when the S&P 500 loses a third of its value in five weeks and then delivers its strongest quarterly gain in 22 years in the subsequent quarter -- three well-known stocks have done what they always seem to do: gone up.
The following three companies were already riding an incredible 11-year winning streak into 2020 (based on total return, inclusive of dividends paid), and they've continued their winning ways through the first six-plus months of the year.
Costco Wholesale
Perhaps the most well-known stock that just can't be stopped is warehouse club operator Costco Wholesale (NASDAQ:COST). Though its share price has been whipsawed a bit in 2020, Costco is currently higher by 6% for the year and a cool 128% over the past five years. With the exception of 2016 (and 2020 thus far), Costco has generated a double-digit total return for its shareholders every year since 2008.
Though there are a number of reasons Costco just keeps winning, its memberships play the biggest role. These annual memberships, which start at $60, provide high-margin revenue that allows Costco to undercut other retailers on price. Plus, paying for a membership makes it far likelier that a customer will purchase products within Costco's ecosystem rather than shop anywhere else.
Costco also benefits from its bulk-buying tactics. It's no secret that buying product in bulk nets Costco a cheaper base price. The company is then able to pass along these savings to its paying members, as well as to use these low prices as a lure to bring in new members.
As one final note, there's no question that COVID-19 has helped Costco. Bulk buying on the consumer end has been a blessing for the entire grocery and warehouse industry. It would be a real surprise if Costco didn't lock in its 12th consecutive year of gains when the curtain closes on 2020.
NextEra Energy
Cue Queen's hit song "Don't Stop Me Now," because electric utility NextEra Energy (NYSE:NEE) has proved to be virtually unstoppable over the past 11-plus years. Following a shaky March that saw NextEra, at one point, lose 25% of its value, the company's stock is now up 2% on a year-to-date basis through July 6.
The single most important catalyst for NextEra Energy continues to be its focus on green-energy projects. No company in the U.S. is generating more capacity from solar and wind power than NextEra, and that's unlikely to change anytime soon. NextEra is continuing to invest tens of billions into its infrastructure and has plans to install 30 million solar panels by 2030 (the "30-by-30" project) to generate another 10,000 megawatts of capacity. Though these investments remain pricey, they ultimately result in significantly lower electricity production costs on a per-kilowatt-hour basis. In other words, this is what allows NextEra's earnings growth to trounce those of its electric utility peers.
Furthermore, NextEra Energy should benefit from historically low lending rates. With the company often financing green projects with debt, it's the perfect time for NextEra to borrow money and further transform its production portfolio.
Also, don't overlook the fact that NextEra Energy's traditional utility operations are regulated. While this keeps NextEra from imposing price hikes at will, it also means no exposure to potentially volatile wholesale electricity pricing. It's this consistency and green energy push that have NextEra on track for its 12th straight winning year.
UnitedHealth Group
Another practically unstoppable stock for 12 years and counting now is health insurance and health systems optimization company UnitedHealth Group (NYSE:UNH). You might not think of health insurers as top-performing stocks, but UnitedHealth's total return has topped 36% in 5 of the last 11 years. With its stock down as much as 34% in March, UnitedHealth's 3% year-to-date return is more impressive than it sounds.
Ironically, one of the things that makes UnitedHealth Group tick is the lack of healthcare reform at the congressional level. Though there have been numerous instances in which lawmakers have homed in on the idea of bringing down drug prices or reforming the insurance industry, most of the time, no change is enacted. This allows UnitedHealth excellent long-term visibility and is a key reason it's able to continue increasing health insurance premiums.
In terms of growth drivers, UnitedHealth has leaned on Optum to a greater degree in recent years. Optum's purpose is to improve the operating efficiency of healthcare systems. During the COVID-19-impacted first quarter, Optum's revenue skyrocketed 25% to $32.8 billion, which essentially accounts for half of UnitedHealth's consolidated sales. Though OptumRx's prescription drug fulfillment comprises a significant portion of Optum's total sales ($21.6 billion out of $32.8 billion), the faster-growing analytics and health operations segments are what should drive operating margins higher over the long term.
With UnitedHealth Group expected to benefit from an increase in personal health insurance demand due to COVID-19, look for the company to make a serious run at extending its streak to 12 straight years of gains.
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>>> Top Utilities Stocks for July 2020
NRG, PNW, and NEE are top for value, growth, and momentum, respectively
Investopedia
By JASON FERNANDO
Jun 29, 2020
https://www.investopedia.com/top-utilities-stocks-4582243?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo#citation-45
The utilities sector is made up of companies that provide electricity, natural gas, water, sewage and other services to homes and businesses. Many of these companies are heavily regulated, and include Duke Energy Corp. (DUK), Southern Co. (SO), and American Electric Power Co. Inc. (AEC). Utilities stocks, as represented by the Utilities Select Sector SPDR ETF (XLU), have underperformed the broader market, with a total return of -6.0% compared to the S&P 500's total return of 5.7% over the past 12 months.1? These market performance numbers and the statistics in the tables below are as of June 25.
Here are the top 3 utilities stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Utilities Stocks
These are the utilities stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
BEST VALUE UTILITIES STOCKS
NRG Energy Inc.: NRG Energy is an integrated power company that produces, sells, and distributes energy and energy services. The company provides energy production and cogeneration facilities, thermal energy production, and energy resource facilities. On May 7, NRG reported a 7% decline in revenue and a 75% decline in net income for Q1 2020, which ended March 31, 2020. The company said that there has been a reduction in load across its markets due to COVID-19, and that uncertainty about demand will continue until the economy recovers.2?
PPL Corp.: PPL is an energy and utility holding company that, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. On May 8, the company announced its Q1 2020 earnings, posting a 7.5% gain in net income per share even though non-GAAP earnings from operations declined about 4%.3?
Exelon Corp.: Exelon is a utility services holding company that, through its subsidiaries, engages in the generation and distribution of energy in both the United States and Canada. Its energy operations are diversified across various sources, including fossil fuels, hydroelectric power, nuclear power, and renewables.
Fastest Growing Utilities Stocks
These are the utilities stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
FASTEST GROWING UTILITIES STOCKS
Pinnacle West Capital Corp.: Pinnacle West Capital is a utility holding company that, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. On June 23, the company said that it does not expect the COVID-19 pandemic to result in any disruptions to their customers’ power supply as it implements numerous steps to protect employees and maintain service. These include adding additional layers of backup personnel to help prevent potential service disruptions, and implementing new sanitation and hygiene practices. The company also said it's providing various concessions to customers who may be unable to pay their energy bills.4?
Sempra Energy: Sempra is an energy services holding company that, through its subsidiaries, generates electricity, delivers natural gas, operates natural gas pipelines and storage facilities, and operates a wind power generation project. The company announced on June 24 that it had completed the $2.2 billion divestiture of its Chilean assets, which were sold to the Chinese investment holding company, State Grid International Development. This is part of a broader effort to sell its South American assets, and Sempra thus far has raised approximately $5.82 billion, including the sale of its Chilean holdings.5?
Alliant Energy Corp.: Alliant Energy is a public-utility services company that supplies electricity, natural gas, and water to residential and commercial customers. The company serves customers in Illinois, Iowa, Minnesota, and Wisconsin. On May 26, the company announced plans to expand its solar energy infrastructure in Wisconsin, which ultimately would provide power to 175,000 homes per year.6?
Utilities Stocks with the Most Momentum
These are the utilities stocks that had the highest total return over the last 12 months.
UTILITIES STOCKS WITH THE MOST MOMENTUM
NextEra Energy Inc.: NextEra is an electric power and energy infrastructure company that generates electricity through wind, solar, and natural gas. Through its subsidiaries, the company also operates multiple commercial nuclear power units. CEO Jim Robo has said that the company's strong underlying businesses, along with about $12 billion in liquidity, should enable NextEra to deliver adjusted EPS near the "top end" of the company's expectations for the next 3 years.7?
Eversource Energy: Eversource Energy is a utility holding company that engages in the generation, transmission, and distribution of natural gas and electricity. The company earlier this year agreed to acquire the Massachusetts natural gas assets of Columbia Gas for $1.1 billion from NiSource Inc. (NI).8?
Dominion Energy Inc.: Dominion Energy is a producer and transporter of energy products. The company provides natural gas and electric energy transmission, gathering, and storage solutions. On June 18, the company announced several measures designed to help customers who are experiencing difficulty making their payments, due in part to the economic disruptions caused by COVID-19
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>>> 5 Utilities Stocks That Will Help Pay the Bills
InvestorPlace
by David Moadel
May 21, 2020
https://finance.yahoo.com/news/5-utilities-stocks-help-pay-185044371.html
Are you looking for a wild ride or are you looking for consistent income? For a de-risked portfolio and solid dividends, utilities stocks are a time-tested favorite investment option.
Along with the dividends, utilities stocks are considered relatively safe because they provide power to homes and businesses. This is considered a necessity that never goes out of style.
It’s a sound policy to stick to the best companies in any sector. When it comes to utilities companies, five names are well-regarded and have a long history:
Duke Energy (NYSE:DUK)
Southern (NYSE:SO)
Dominion Energy (NYSE:D)
Consolidated Edison (NYSE:ED)
Excelon (NASDAQ:EXC)
Utilities Stocks to Buy:
Duke Energy (DUK)
Like just about every company in the United States, Duke Energy is dealing with the Covid-19 crisis. This particular company seems to be taking the situation in stride, however.
Consider Duke’s first-quarter net income, which came out to $899 million. That’s just about exactly in line with the same quarter of the previous year, when Duke’s net income was $900 million. Meanwhile, this year’s first-quarter revenue totaled $5.95 billion, which is not too far below the $6.16 billion reported in the first quarter of the prior year.
So, while there is some pressure being felt during the pandemic, it’s not too severe. For the time being, DUK stockholders can ride out the crisis with a decent 4.54% forward annual dividend yield.
Southern (SO)
“Critical infrastructure businesses like ours never take a day off,” observed Thomas A. Fanning, the president and CEO of utilities giant Southern. Fanning’s 100% right about that as Southern is an essential utilities provider for around 8 million customers.
Southern remains in good fiscal health, as well. For 2020’s first quarter, the company posted adjusted earnings per share of 78 cents. That’s an eight-cent year-over-year increase as well as 6 cents greater than the company’s estimate.
SO stock is a safe bet since it has such a massive presence and is crucial to people’s standard of living. It’s also a dividend achiever with a forward annual yield of 4.78%. All in all, this pick deserves to be on anyone’s top utilities stocks list.
Dominion Energy (D)
If you said that D stock is recession-proof, you’d by exaggerating but only slightly. The shares have held up fairly well during the novel coronavirus crisis. Besides, the 4.77% forward annual dividend yield is a strong incentive to hold the stock.
Fiscally, Dominion Energy has held up reasonably well despite the pandemic. For the first quarter of this year, Dominion reported total revenues of $4.5 billion. That’s actually a marked improvement over the revenues of $3.9 billion Dominion generated in the year-ago quarter.
With over 7 million customers across 20 U.S. states relying on Dominion for their energy needs, this company’s a mainstay in the utilities sector and D stock is a highly reliable income generator.
Consolidated Edison (ED)
Like to invest in companies that have been around for a while? If so, take a look at Consolidated Edison, which was founded way back in 1884. If you happen to reside in New York or New Jersey, there’s a fair chance that your electricity service is provided by this esteemed company.
Has “Con Ed” been able to weather the Covid storm? The answer would be yes as the company’s adjusted earnings for the first quarter totaled $451 million. That’s $1.35 per share and it beats the $448 million, or $1.39 per share, generated during the same quarter of last year.
Plus, ED stock features a trailing 12-month price-to-earnings ratio of 18.15 and a forward annual dividend yield of 4.32%. Those are nice stats and this stock should perform well even in these challenging times.
Excelon (EXC)
This one’s a little bit different from the other utilities-sector stocks on this list. Excelon is a relative newcomer, having been incorporated in 1999. Plus, EXC stock is the only name on this list that’s traded on the Nasdaq.
So, it could be argued that Excelon is a more “modern” utilities company. Its true strength, however, is that it’s diversified with fossil, nuclear, hydroelectric, wind and solar segments.
With 87 cents per share in operating earnings for 2020’s first quarter, Excelon remains on par with its results from the same quarter of last year. Additionally, a trailing 12-month price-to-earnings ratio of 13.79 and a forward annual dividend yield of 4.17% indicate a compelling value with EXC stock.
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>>> Utilities Plunge: Making Sense Of The Sector's Big Decline
Seeking Alpha
Mar. 23, 2020
by Ian Bezek
https://seekingalpha.com/article/4333697-utilities-plunge-making-sense-of-sectors-big-decline
Summary
Utility stocks dropped nearly 20% between last Tuesday and last Friday.
This has to be concerning to investors that bought these stocks as strong defensive plays.
There are two factors that could hurt utility profitability going forward.
The sector offers fine yields, but isn't compelling yet aside from the income.
This idea was discussed in more depth with members of my private investing community, Ian's Insider Corner. Get started today »
This article was highlighted for PRO subscribers, Seeking Alpha's service for professional investors. Find out how you can get the best content on Seeking Alpha here.
Last week, the Utility Select Sector SPDR (XLU) sector got utterly smashed. From Tuesday's high onward, the XLU ETF lost 18% of its value. I don't recall these names ever getting hit this badly, even in 2008. It's simply been an incredible drop, with the sector giving back 5 years of gains in a little over a month:
Even more incredibly, if you go way back, XLU was trading for $43 prior to the financial crisis. Thus it's only gone up 10% over the past 13 years, with all other returns coming from dividends. Even farther back, XLU traded for as much as $34 in the year 2000, meaning that the ETF is up only 40% over the past 20 years. Of course, with dividends, things look a lot better. Still, it's a stunning turn of events for a sector that had looked unstoppable over the past two years. On a longer-term chart, you can see that XLU is rapidly threatening to breach price levels from more than a decade ago:
What can we take away from this? For one, utilities have reverted to form - they're simply not a great (nor particularly bad) industry historically. Over the past 82 years (data through 2015) utilities were the median sector, coming in 15th out of 30 in the market, producing essentially market-matching returns:
That table comes from this article, where I discussed this data in much more detail. The fundamental return is calculated based on the real annual growth of dividends over the past eight decades.
As for the question of utilities being defensive, though their stock prices suddenly gave way last week, the companies are still favorable ones to hold in an economic downturn. But investors were using them to play offense throughout 2019, hoping that falling interest rates would lead to sustained higher valuation ratios for the sector. In theory, that's probably still a reasonable hypothesis; reliable dividend streams are worth a lot more in a zero interest rate world.
In the short-run, however, above average valuation ratios become their own risk factor. When people are getting margin calls, or simply wanting to shift funds into more beaten-up names, they're going to sell the stuff where they are still showing a profit. Defensive assets can turn into a source of funds during a panic; even gold (GLD) started selling off at the height of the market panic. Simply put, people will get funds in the short-term wherever they can find them.
Over the long-haul, however, utilities should remain a defensive sector. Thus, is now the time to be buying as prices have come in dramatically? In some cases, yes. A lot of individual utility stocks have come down a great deal in March. That said, before you get too aggressive with your purchases, here are a couple of things to keep in mind.
Potential Issues: Declining Demand, Declining Returns On Equity
Interestingly, there's been (at least that I've seen) little discussion of the economic impact of the current situation on utility companies. Sure, some folks are considering the possibility of the government stopping utilities from collecting on past due clients for the duration of the crisis. That could hurt a bit on a marginal basis.
But zoom out. If the economy grinds to a halt for a few months, what happens to electricity usage? Over in the oil market, traders have quickly reacted to the slowdown by absolutely slamming the price of crude, and its refined products such as gasoline. Oil is more sensitive to the economy than electricity, as oil is the dominate transportation fuel. Most electricity uses, by contrast, aren't greatly impacted by a near-term economic slowdown.
Still, it probably isn't reasonable to think that electricity demand will remain steady. What do we have for data? I haven't seen much yet, but I did run across this interesting data point on New York City electricity usage. There's a ton of caveats here, as it's just one city, the weather could be a factor, and so on. But there appears to be a sharp rollover that started in the week of March 16th:
Historically, we can also look back to 2000 and 2009. Interestingly, due to rises in efficiency, electricity usage per person has pretty much stopped going up in the U.S. - it peaked in 2000 and has gone no higher:
Looking at the data, we can see there was a noticeable decline between 2000 and 2001, in some part likely due to the overall economic slowdown and then also specifically the sizable drop-off in economic activity immediately following the 9/11 attacks.
Moving forward, from 2008 to 2009, electricity consumption per capita dropped from 13,663kWh to 12,914. The effect was particularly harsh in the first quarter of 2009, when the economy and stock market were still heading downward. For that quarter, Power Magazine reported that residential electricity consumption was down 2.5%, commercial consumption was down 4.7%, and industrial consumption was down by fully 13.8%.
We should expect as much of a decline, and probably significantly more in the near-term, in 2020. Residential usage may actually go up a touch, as people spend far more time at home. That said, the marginal electricity use from staying at home probably isn't that high, many high-impact uses such as heating and appliances aren't going to change too much.
Meanwhile, commercial use is going to get pummeled. In 2009, stores had less activity, but there wasn't a mass government-ordered shutdown. You had malls with few shoppers, but not malls that were locked up with everything turned off inside as we have now. Similarly, industrial use will plummet for the length of the shutdown, as non-essential factories simply won't operate.
Longer-term, there's also the question of authorized returns on equity "ROE". Utilities tend to bargain with states and localities to earn a set rate on their capital investments. These ROE targets are a balance that should give utilities sufficient incentive to invest in needed services and provide safe and reliable operations for consumers. On the other hand, the locality has an obvious incentive to keep the utility from price gouging. These ROE targets are a well-known feature of the industry - here's a table by S&P from 2017, for example, showing this process in action:
There are now two factors working against utilities going forward. For one, with the economy hurting, look for states to be tougher at the negotiating table. When times are tough, there's less slack to be had overall. Second, the lower interest rates for longer environment is going to drag down the overall "fair" ROE target as time goes on. In a world where a utility's capital costs, say, 5%, a 10% ROE might make sense. But if the utility can now get capital at half that, the state or locality is likely to want a chunk of that savings as well. At the end of the day, utilities are regulated businesses, and as such, they aren't going to get the full benefits of favorable market-pricing developments.
As I showed above, historically utilities have been an average industry, doing no better or worse than the market as a whole. And after their recent sell-off, many individual utility stocks are back to more normal valuations, though they're by no means "cheap" yet.
Should you buy some? They're still one of the safest income sources around, no doubt, and the current yields have moved up nicely. For longer-term investors, however, you can surely find more attractive stocks that are much more deeply-discounted at the moment.
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>>> Clean Power So Cheap a Staunch Defender of U.S. Coal Went Green
Bloomberg
By Gerson Freitas Jr
February 3, 2020
CEO says Southern is now pursuing a ‘low-to-no’ carbon future
Former coal booster Fanning eyes ‘all of the above’ resilience
https://www.bloomberg.com/news/articles/2020-02-03/clean-power-so-cheap-a-staunch-defender-of-u-s-coal-went-green?srnd=premium
Thomas Fanning, the leader of one of the nation’s biggest utilities, once railed against “the war on coal.” Now he’s on a very different bandwagon, part of the low-to-no-carbon crew.
It’s a shift that bows to a new reality as natural gas and solar prices fall and climate change fears rise. “One of the riskiest things a company can do in this kind of environment is not to change,“ said Fanning, the chief executive officer of Southern Co., the Atlanta-based utility that generates enough electricity to power a country the size of Australia.
The economic winds are so strong that even many of those who stridently resisted the transition to cleaner energy are converts. Coal fueled more than half of Southern’s power in 2011, when Fanning argued in Washington that limiting its use would “negatively impact the nation’s economic well being.” Today just 22% of Southern’s power comes from coal and the company is a top solar supplier.
That doesn’t put Southern at the top of charts, though. Its use of coal didn’t drop below the industry average until last year, and the 12% of its power that came from renewables in 2019 was below the 17% industry average.
Fanning, 62, said in an interview that Southern is seeking to find the right balance of options to move forward. He remains opposed to regulating coal and doesn’t approve of clean energy mandates. But he described himself as always having been “one of the leading spokesmen in the industry for ‘all of the above,’ resilience -- the need for innovation, and for thinking about how to create a future,” adding he’d never characterize himself or Southern as being “coal-centric.”
Southern’s 2016 acquisition of PowerSecure made it the nation’s largest developer of microgrids in a move into distributed generation. But the company is also heavily involved in researching carbon-capture technologies for natural gas, he said, as well as hydrogen for fuel cells.
“We’re the first company I think that came out and said ‘low-to-no’ carbon by 2050,” he said.
Coal Crunch
Southern Co.'s power generation from coal has plummeted since 2007
Critics say Southern still needs to pick up the pace. Karl Rabago of the Pace Energy and Climate Center says Southern has taken advantage of its monopoly powers and friendly regulatory environment to continue squeezing profits from coal and delaying a final transition into renewables. Meanwhile, its Alabama franchise is accused by environmental groups of overcharging customers with rooftop solar panels, deliberately discouraging new installations and avoiding competition.
“Resisting market forces can be profitable if you enjoy a monopoly,” Rabago said. “The fundamental question for Southern is how long can its operating companies forestall what’s some think is inevitable or how successfully can they absorb those inevitabilities and transmogrify them into a Southern’s version.”
‘Clean Coal’
At the same time, Southern’s bets have at times produced pain for shareholders and ratepayers.
Over the past decade, the company spent billions in a first-of-its-kind “clean coal” power plant in Mississippi that was abandoned after construction delays and cost overruns. The carbon-capturing technology behind the so-called Kemper project -- which was flagged by Trump as a way to help save mining jobs -- worked just fine but became uneconomic as natural gas prices plunged, Fanning said.
The company is also spending over $8 billion on a last-remaining U.S. nuclear project critics say will saddle customers in Georgia with expensive energy bills. The so-called Vogtle units 3 and 4, the first new reactors ordered in the U.S. in decades, have doubled in price and are currently running more than five years behind schedule. The spending spree forced Southern to sell assets including its Florida utility.
Sill, over the past year, Southern’s shares have jumped 45%, outpacing the 22% gain for the industry benchmark, as fears that the company wouldn’t be able to complete the Vogtle project faded amid progress reports.
Sophie Karp of KeyBanc Capital Markets Inc. in January raised its recommendation on the stock, saying it’s still cheap relative to main rivals. Once America’s largest utility company, Southern has now a market value equivalent to less than 60% of that for renewables powerhouse NextEra Energy Inc.
”We’re not only reacting to a future, we’re trying to invent the future,” Fanning said.
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>>> Duke Energy's Arm Inks Deal to Build Battery Storage Project
Zacks Equity Research
October 15, 2019
https://finance.yahoo.com/news/duke-energys-arm-inks-deal-130601866.html
Duke Energy Corp.’s DUK subsidiary, Duke Energy Carolinas, recently announced its agreement with Anderson County, S.C., to build energy storage project at the Anderson Civic Center.
Notably, the project will be used as back-up power with a capacity to serve the Civic Center for at least 30 hours based on normal usage during outages. The company has submitted a request to the Public Service Commission of South Carolina for approval of the lease agreement for the land from Anderson County.
After the expected completion of final engineering study later in 2019, the project will go through a competitive bidding process for construction and is expected to be in service in early 2021.
Benefits of the Investment
One of the largest drawbacks of electricity generation from renewable energy sources is that it fails to provide electricity 24x7. Electricity generated from wind and solar energy sources requires storage, which can be used during periods of shortage. Increasing usage of battery storage promotes renewable energy as well as reduces the dependency on grid. Investments in such projects ensure significant energy grid support in any region.
The latest project is part of the company's Integrated Resource Plan (IRP), which was announced in October 2019. Per the plan, the company will invest $500 million in battery storage projects in Carolinas over the next 15 years for electricity generation capacity of 300 MW.
The company is also undertaking initiatives to build battery storage projects in other states. In June 2018, its subsidiary — Duke Energy Florida (DEF) — announced plans to construct three battery storage projects with 22 MW capacities. During the second quarter of 2019, the company announced 22 MW of battery storage projects in the Sunshine state, kicking off the first wave of its planned 50-MW pilot program. These initiatives are likely to expand Duke Energy’s growth prospects in the booming battery storage market.
Battery Storage Prospects
With increasing environmental awareness, the U.S. electric utility industry is shifting focus to renewable sources for electricity generation. To this end, the companies are trying to lower emission by implementing innovative technologies like battery storage. Per the U.S. Energy Information Administration (EIA), 899 MW of battery storage projects were being operated in the United States as of March 2019. Moreover, EIA expects battery storage power capacity to exceed 2,500 MW by 2023.
Xcel Energy Inc XEL, NextEra Energy NEE and PG&E Corp PCG are also investing in battery storage projects and benefit from the prospects in the battery storage market.
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>>> US Utility-Scale Battery Storage Capacity to Grow Rapidly
Zacks
by Sanhita Banerjee
October 15, 2019
https://finance.yahoo.com/news/us-utility-scale-battery-storage-122912817.html
The U.S. electric utility industry is undergoing a transition as companies are fast shifting focus to produce electricity from renewable sources. Per the U.S. Energy Information Administration (EIA), wind, solar and other non-hydroelectric renewables will be the fastest growing source of electricity generation for the next two years. EIA forecasts 10% of utility-scale electricity generation in 2019 and 12% in 2020 from wind, solar, and other non-hydropower renewables sources in the United States.
As electricity generation from wind and solar energy sources is on the rise, the need to store the excess electricity has become essential. Here comes the need for battery storage, which helps store the surplus electricity for use during periods of shortage.
Utilities operating in the United States are trying to cut down emission by implementing innovative technology. The following utilities have invested in battery storage projects.
Xcel Energy XEL, under its Colorado Clean Energy Plan, will replace the Comanche coal units with a $2.5-billion investment in renewables and battery storage, which includes 1,131 megawatts (MW) of wind, 707 MW of solar PV, and 275 MW of battery storage in the state.
In October 2019, Duke Energy Carolinas announced plans to partner with Anderson County, S.C., to build an energy storage project at the Anderson Civic Center, Carolinas. This project is part of the company's plans, announced last October, to invest $500 million in battery storage projects in Carolinas over the next 15 years for electricity generation capacity of 300 MW. In June last year, Duke Energy's DUK subsidiary Duke Energy Florida (DEF) announced plans to construct three battery storage projects with 22 MW capacities.
In March 2019, NextEra Energy’s NEE Florida Power & Light subsidiary announced that it plans to build a 409-MW energy storage project in Florida, which will be powered by utility-scale solar.
We believe these companies are good investment options as these have returned 31.1%, 17.6% and 33.7%, respectively, outperforming the industry’s 13.3% in the past year.
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>>> 7 “Boring” Stocks With Exciting Prospects
These stocks will chug right along, growing their stock price and delivering solid dividend yields
By Louis Navellier
Editor, Growth Investor
Aug 23, 2019
https://investorplace.com/2019/08/7-boring-stocks-with-exciting-prospects/
When I say “boring” stocks, that might seem like I’m talking about stocks that aren’t worth your attention.
Quite the opposite.
The market has been on a roller coaster ride recently. We’ve had a couple yield curve inversions, the Dow Industrials lost 800 points in one day, and the trade war with China continues unabated.
Europe is headed into recession, negative interest rates reign, and Brexit looks like it’s going to be messy.
Wouldn’t it be nice in all this turmoil to have some stocks that will chug right along, growing their stock price and delivering solid dividend yields, most of which outpace inflation?
That’s what I call boring stocks. They aren’t unicorns or in sexy, headline-grabbing industries. But they do make money slowly and steadily. And they are all investor-friendly.
These seven boring stocks with exciting prospects below are the perfect antidote to the prevailing winds tossing this market around.
American States Water (NYSE:AWR) is an interesting utility because it reaches across a couple lines of business. It’s a company that manages water resources for over 80 communities in California, particularly around Los Angeles.
But it also has divisions that provide electricity and contracted services to over a million customers in nine states.
Water is becoming an increasingly important resource. And water utilities are becoming key assets to manage these resources. As we have seen in Michigan and Georgia, as well as many other states, old infrastructure is endangering the lives of citizens.
In agricultural states like California, wise management of resources for business and the citizenry is becoming ever more complex.
AWR stock has had a run in the past year, up 46% in the past 12 months and 33% year to date. Given that move, its dividend has diminished, but it still delivers at almost 1.4%, which may not beat current CD rates, but they don’t offer the growth potential of AWR stock, either.
York Water (NYSE:YORW) is the oldest investor-owned utility in the country. It started in 1816, when a group of local businessmen in York County, Pennsylvania got together and issued shares in a company that could mange water resources for the growing city of York.
As the city grew, it needed a reliable source of water for the community, as well as water at the ready for any structure fires. Bucket brigades weren’t going to be able to serve the growing city.
In recent years, YORW has gone into the wastewater business as well. This is just managing the flow on a different set of pipes and adds value to the overall business.
But YORW has stuck to its knitting. It has grown with the needs of the two counties it serves, but it isn’t looking to take on risky expansion. Its sub-$500 million market cap means you’re getting a small, focused utility with great relations with the utility regulators and a well-established infrastructure.
The stock is up 25% in the past 12 months, 17% year to date and delivers a trusty 1.9% dividend to boot.
ONE Gas (NYSE:OGS) is a natural gas utility that operates in Texas, Oklahoma, and Kansas. It provides gas for commercial and residential customers.
The nice thing about this company is that it’s focused. There are plenty of big utilities that have natural gas as well as renewables along with their electric generation and distribution mix.
OGS just does natural gas. And that’s a good thing, especially if you already have a bigger utility or two in your portfolio. Its two million customers make it one of the largest natural gas utilities in the U.S.
Natural gas is one of the great energy resources in the U.S. While coal is still around, much of its production is getting shipped overseas because it’s not as efficient as natural gas.
Fracking operations in Texas and Oklahoma as well as many other places in the U.S. have unearthed significant natural gas assets. This spells growth for years to come.
Most of OGS stock’s gains came in 2019 – it has return 16% year to date and 14% in the past year. It delivers a solid 2.2% dividend yield that’s outpacing inflation.
Chesapeake Utilities (NYSE:CPK) can recall its roots back in 1859 as the Dover Gas Light Company. Remember, gas lights were all the rage in the late 19th century and early 20th century until reliable electricity would supplant them.
CPK is from Delaware, the home of the powerful DuPont family, which means it had not only a consumer base but also a significant industrial base.
CPK operates on the Delmarva peninsula, some of the most popular beach traffic on the East Coast, as well as in Florida, as Florida Public Utilities.
Its operation has also expanded beyond natural gas and now encompasses propane, electricity, and even steam. It also has regulated and unregulated business divisions.
The regulated business helps keep business steady and reliable and the unregulated side takes advantage of opportunities that pop up in the market to make bigger gains.
With a market cap of $1.5 billion, it’s not a big company, but it is rock-solid. It’s up 19% year to date and delivers a 1.7% dividend. Nothing fancy, just a solid utility with a steady customer base in growing areas.
NextEra Energy (NYSE:NEE) is the largest utility holding company by market cap.
That’s right, we’re going to talk about a big-cap utility that operates in one of the fastest-growing states in the U.S. and has a very strong market position in one of the hottest growth sectors in the utilities sector – renewable energy.
This hardly sounds like a boring stock, right?
Well, just remember all this is in the utility sector, so it’s all relative. But NEE stock is getting a lot of attention, even from people who don’t usually consider utilities.
It has two divisions: regulated and unregulated. Its regulated division is FPL, formerly known as Florida Power and Light. FPL delivers electricity to about 10 million customers across nearly half of Florida (mostly the southern and western half) and is the third-largest utility in the U.S.
Its unregulated division is the largest producer of wind and solar in the world. Other utilities looking for carbon futures make this a huge growth opportunity for NEE.
NEE stock is up 29% in the past 12 months and delivers a near 2.3% dividend. And none of this is subject to trade wars, GDP or a strong dollar.
Duke Energy (NYSE:DUK) has 7.7 million customers across six states: Florida, North Carolina, South Carolina, Ohio, Tennessee and Indiana. It is a diversified monster that provides electricity generation and distribution as well as natural gas distribution services.
The company started in 1904 when it took over the Catawba Hydro Station in South Carolina to help industrialize the south. The goal was to power the Victoria Cotton Mills and look for a way to diversify the economy of the agrarian south.
Nowadays, DUK has continued to lead, but now is known for being one of the most proactive renewable energy utilities in the nation. This has been an effort of the company long before it was cool to look at renewables as a way to generate power for most big utilities.
DUK has nine subsidiaries that operate across its territories, including an array of unregulated operations that help power the regulated side of the business as well as trade with other utilities and power customers.
While DUK stock hasn’t been on fire – up 5% year to date and 12% in the past year – its dividend is generous (4.1%) and about as reliable as they come. That means you’ll get paid inflation beating returns come what may with the rest of the market.
TerraForm Power (NASDAQ:TERP) is certainly a 21st century energy company. Its single mandate is to operate, own, and acquire wind and solar assets in North America and Europe.
Right now, that means nearly 30 U.S. states and territories as well as Canada, Chile, Spain, Portugal, Uruguay and the UK.
It has more than 3,700 megawatts of capacity, that’s split 64/36 wind and solar. The revenue split on its generation platforms is 51% solar, 49% wind.
Bear in mind, this is all unregulated. TERP isn’t a utility in the traditional sense since it doesn’t have a regulated business. It sells it power to utilities and other power producers that want to add renewables to their energy mix.
It also means that utilities don’t have to buy or expand power generation operations, but they can simply power from TERP until the demand becomes significant enough to justify the larger expansion expense.
Buying renewable energy also helps manage utilities’ carbon credits. While the federal government has loosened its regulatory grip on clean energy, many states and other countries haven’t.
The company is just five years old, so it’s still a baby in this sector, but it’s growing fast. TERP stock is up 55% year to date as low interest rates mean it can continue to expand its operations and lower its operating costs. Its 4.8% dividend is also attractive, but bear in mind that it’s not as secure as a utility like Duke or Dominion Energy (NYSE:D).
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Name | Symbol | % Assets |
---|---|---|
NextEra Energy Inc | NEE | 11.29% |
Duke Energy Corp | DUK | 6.79% |
Dominion Energy Inc | D | 6.55% |
Southern Co | SO | 6.45% |
American Electric Power Co Inc | AEP | 4.61% |
Exelon Corp | EXC | 4.37% |
Sempra Energy | SRE | 3.92% |
Xcel Energy Inc | XEL | 3.23% |
Public Service Enterprise Group Inc | PEG | 3.17% |
Consolidated Edison Inc | ED | 2.98% |
Name | Symbol | % Assets |
---|---|---|
NextEra Energy Inc | NEE | 13.21% |
Duke Energy Corp | DUK | 7.79% |
Dominion Energy Inc | D | 7.69% |
Southern Co | SO | 7.43% |
American Electric Power Co Inc | AEP | 5.29% |
Exelon Corp | EXC | 5.01% |
Sempra Energy | SRE | 4.50% |
Xcel Energy Inc | XEL | 3.78% |
Public Service Enterprise Group Inc | PEG | 3.63% |
Consolidated Edison Inc | ED | 3.47% |
Name | Symbol | % Assets |
---|---|---|
NextEra Energy Inc | NEE | 11.26% |
Duke Energy Corp | DUK | 6.77% |
Dominion Energy Inc | D | 6.53% |
Southern Co | SO | 6.16% |
American Electric Power Co Inc | AEP | 4.59% |
Exelon Corp | EXC | 4.36% |
Sempra Energy | SRE | 3.91% |
Xcel Energy Inc | XEL | 3.22% |
Public Service Enterprise Group Inc | PEG | 3.16% |
Consolidated Edison Inc | ED | 2.98% |
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