Business
Two Stocks That Play Pivotal Roles In America’s Infrastructure
Rolling blackouts, freezing homes, and skyrocketing electricity prices. Back in February, Texas’ primary electric grid suffered a one-two punch wrought by the deep freeze and off-the-charts demand for power as power plants struggled to keep up with heating demand. Power outages such as the Texas one are not only becoming much more frequent compared to the situation two decades ago but are also increasing in severity mainly due to climate stresses and a power grid that’s increasingly unable to hold up. The Texas blackouts marked the third time the electric system failed to perform adequately in winter in recent years (1989, 2011, and 2021).
The devastating blackouts once again brought into sharp focus the fact that the United States is relying on an aging electrical grid that’s increasingly unstable, underfunded, and incapable of taking us to a new energy future. Despite being the wealthiest country in the world, the U.S. only ranks 13th in the quality of its infrastructure.
Indeed, our power grid is the weakest link in the ongoing energy transition.
Last year, a new study from UC Berkeley and GridLab found that it will be economically feasible for renewable energy to power 90% of a reliable grid by 2035, while only depending on natural gas for 10% of annual electricity production.
Unfortunately, whereas renewable power sources have grown dramatically in recent years, our aging electrical grid is simply incapable of fully integrating them into our energy use, leading to so much potential power wasted.
Yet, therein lies a great investment opportunity.
A Wood Mackenzie analysis has estimated the cost of shifting the U.S. power grid to 100% renewable energy over the next 10 years at a staggering $4.5 trillion. That runs the gamut from constructing and operating new generation facilities, investing in transmission and distribution infrastructure, making capacity payments, delivering customer-facing grid edge technology, and more.
President Biden’s 10-year, $2 trillion American Jobs Plan seeks to re-energize the power grid, upgrade roads, bridges, and water systems and help make U.S. infrastructure more resilient to the impacts of climate change.
But that amount will hardly be enough to go the distance, and private investors will have to step up to the plate. Modernizing the power grid alone will require $300 billion per year spread out over 15 years, or double the current annual spending of $150 billion.
That’s why investing in companies working hard to build the next-generation grid could pay off big dividends for long-term investors.
Here are our top picks, with good dividend growth opportunities serving as a safety net.
Next Era Energy Inc. NEE (-1.74%) is a Florida-based clean energy company and America’s largest electric utility holding company by market cap. NEE (-1.74%) is the world’s largest producer of wind and solar energy, with more than 50,000 megawatts of generating capacity. Next Era Energy is one of the largest utilities in the country, with two electric utilities in Florida. The company owns eight subsidiaries, with the largest, Next Era Energy Services, supplying 5 million homes in Florida with electricity. Next Era Energy Transmission integrates renewable energy and strengthens the electricity grid.
Next Era is quickly establishing itself as a leader in building next-generation grids designed to handle increased loads from renewable energy.
NextEra has been building its grid business both organically through development projects as well as inorganically through acquisitions. For example, earlier this year, NextEra acquired GridLiance for $660 million, adding 700 miles of high-voltage transmission lines across six states. Last year, NEE (-1.74%) won regulatory approval to build a new transmission line in Western New York that will ease grid congestion and facilitate the delivery of renewable energy from the region.
During the company’s latest earnings call, management reiterated its 30×30 goal to install more than 30 million solar panels, or roughly 10,000 megawatts of incremental solar capacity, in Florida by 2030 through one of its subsidiaries, Florida Power & Light (FPL).
Another of NEE (-1.74%)’s subsidiaries, Next Era Energy Partners LP(NYSE: NEP), is publicly listed and pays a 3.4% dividend one of the highest in the industry. NEP acquires, manages, and owns contracted clean energy projects with a preference for businesses with stable, long-term cash flows. NextEra Energy Partners owns interests in dozens of wind and solar projects in the United States, as well as natural gas infrastructure assets in Texas. These contracted projects use leading-edge technology to generate energy from the wind and the sun. The company’s management is shooting for 12-15% dividend growth through 2024, making this an ideal stock for income investors.
Minneapolis-based Xcel Energy Inc. XEL (-2.56%) is a leading electricity and natural gas utility serving 3.6 million customers in Minnesota, Michigan, North Dakota, South Dakota, Wisconsin, Colorado, Texas, and New Mexico.
Xcel boasts nearly 9,000MW in operating capacity for its wind projects and another 1,600MW for solar. The company has increased solar generation by more than 4x since 2011 and plans to grow its wind generation capacity by 50% over the next couple of years.
Like NextEra, Xcel Energy operates one of the biggest and fastest-growing investor-owned transmission systems with more than 20,000 miles of transmission lines across 10 states.
Xcel has a goal to invest $24.3 billion through 2025 to expand its operations, with 25% of that earmarked to expand its transmission business to help support increased renewable energy deployment. One of the company’s top projects is the proposed Colorado Pathway Transmission expansion that will see the company invest up to $1.7 billion to build 560 miles of new transmission lines to support 5.5 gigawatts of new renewable power generation.
As part of the company’s own investment thesis, Xcel shoots for consistent shareholder returns based on 5-7% annual EPS growth and similar dividend growth with a 60-70% payout ratio. The company aims to maintain a 3% dividend yield, meaning there’s room for improvement on the current yield of 2.63%.
Kimani writes for Oilprice.com
By: Alex Kimani
MoniePoint Inc. a digital financial firm in Nigeria, has said it is empowering community pharmacists across the country with innovative payment solutions to improve access to drugs.
The financial firm said it had also provided loans for pharmacists under the aegis of the Association of Community Pharmacists of Nigeria (ACPN) to drive healthcare delivery in the country.
MoniePoint in a release titled, “Inside Nigeria’s community pharmacies: How Moniepoint drives healthcare access with payments and funding”, has reaffirmed its commitment to providing digital payment solutions to improve health outcomes in Nigeria.
The release examined how community pharmacies play a crucial role as vital access points for medical care in Nigeria, especially in areas with limited hospital or clinic access.
According to the release, the ACPN National Chairman, Ambrose Igwekwam, highlighted the critical role played by community pharmacies in Nigeria’s healthcare system over the years.
Igwekwam, however, expressed concerns over the challenges confronting the nation’s pharmaceutical industry which he said was hindering access to affordable medicines.
The pharmacist listed poor infrastructural systems, power, transportation, regulatory bottlenecks, importation dependency, and limited research opportunities as major challenges facing the pharmaceutical sector.
He also stressed the need for robust collaborative efforts with institutions like Moniepoint to strengthen the sector.
“As Nigeria continues to grow, improving local pharma manufacturing to meet the demands of this growth presents a key opportunity for us all.
“There is also the African Continental Free Trade Area Agreement, which is expected to boost our industry, especially when we start producing our drugs locally, which will provide the much needed foreign exchange from exports.
“We are also seeing advancements in digital health and technology which would hopefully deepen the practice of e-prescription in Nigeria”, the ACPN boss said.
Corlins Walter
In order to enhance customer service and streamline operations, the Chartered Insurance Institute of Nigeria (CIIN) has called on stakeholders in the insurance industry to embrace Artificial Intelligence (AI).
The President of the institute, Yetunde Ilori, made this call at the 2024 Office Representatives Committee (ORC) Workshop, organised by the institute, with the theme “AI and the Future of the Insurance Industry”, in Lagos.
Ilori at the event, emphasised the importance of AI adoption, noting that it was not a threat to jobs but rather a tool to improve efficiency across the insurance sector.
“It is not about AI taking over our jobs, but about us using AI to simplify processes and give maximum satisfaction to all the customers we serve whether as underwriters, brokers, loss adjusters, or in educating our members”, she said.
The workshop, which brought players in the insurance sector together, aimed to address how AI could be leveraged to transform business processes and improve customer interactions.
The Chairman of the ORC, Monica Nwachukwu, underscored the role of AI in modernising the industry, adding, “AI can automate customer and claims processes, allowing insurers to provide faster and more efficient services to their customers”.
She explained how AI could help extract data from legacy systems, enhancing decision-making processes.
“By integrating AI with APIs, insurers can feed valuable data into AI solutions to improve operations and customer service”, she added.
In his address, the Managing Partner of A4S and Training Heights, Orlando Odejide, stressed the need for companies to align their strategies with future technologies like AI, especially as they prepare for 2025.
“Any organisation that wants to grow into the future must have its strategic plan in place. If your strategy for 2025 is not ready, it should be done by October”, he advised.
He encouraged participants to think critically about how AI could be integrated into their business models to ensure they remain competitive.
“The idea is for you to use this workshop as a platform to think about your organization and how AI can help streamline your processes and improve growth”, Odejide noted.
In order to gain global respect and recognition, the National Space Research and Development Agency (NASRDA) has reaffirmed its determination to pursue its goal in ensuring that Nigeria’s space capabilities are recognised on the world stage.
The agency also reaffirmed its commitment to positioning Nigeria as a key player in the global space economy.
In a statement by the Director of Media and Corporate Communications, Dr. Felix Ale, NASRDA revealed that the Director-General of the agency, Matthew Adepoju, emphasised this during recent engagements at the 79th United Nations General Assembly and the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and Global Alliance Business Association international conference in Michigan, United States.
The statement noted that Adepoju outlined a forward-thinking agenda, stressing the importance of Nigeria’s space programme as a leader in research, exploration, and technological innovation.
“Our goal is to ensure that Nigeria’s space capabilities are recognised on the world stage.
“We must foster collaborations with global space agencies to enhance our satellite capabilities and technological infrastructure”, he stated.
The NASRDA boss said the agency is focusing on enhancing satellite capabilities, expanding international collaborations, and leveraging space science for national development.
He said NASRDA will have no stone unturned in pursuit of excellence, ensuring the agency secures the necessary resources and recognition to propel it forward.
“The relationships we build today will pave the way for tomorrow’s advancements in space science.
“Innovation and progress thrive in an environment built on collaboration and inclusivity”, he stated.
He emphasised that with the support of the government, international partners, and a dedicated team, NASRDA is poised to make significant strides in the evolving global space landscape.
“We are on the brink of a new era for Nigeria’s space agency. Together, we will ensure our nation stands out in the global space economy”, he said.
Corlins Walter