This Virginia utility beat analysts’ earnings estimates by $0.07 last quarter. The shares have a current dividend yield of 2.41%, paid quarterly.
The AES Corporation (AES)
From Conrad’s Utility Investor
Utilities are (1) not expensive relative to their valuation levels in the past, (2) much cheaper relative to the broad stock market than they’ve been at any point since the bull market began in March 2009 and (3) have done better than arguably any other major sector at growing into their stocks’ bull market gains.
Every season of quarterly results brings its share of earnings surprises, both positive and negative. But if you scan Utility Report Card comments, you’ll find the most frequently recurring theme across the coverage universe is companies maintaining long-term earnings and dividend growth guidance, which for the best in class is squarely in the 5 to 7 percent range.
Better, those growth rates actually held up last year during the pandemic. And with regulators still supportive of the CAPEX plans behind them—and federal dollars about to flow to their purpose as well—there’s every reason to believe companies earnings and dividends will continue to rise at that robust pace going forward.
Despite recent gains, AES Corp) still trades at less than 15 times expected next earnings. Last month’s successful partial IPO of Fluence Energy (FLNC) should accelerate growth of that energy storage venture with Siemens AG, opening up a new profit stream even as the company executes its earnings and dividend guidance for 7 to 9 percent growth through 2025. There’s another dividend increase set for next month, and a boost by Moody’s to investment grade by mid-2022 is likely.
Buy up to 28.
Roger Conrad, Conrad’s Utility Investor, ConradsUtilityInvestor.com, 888-960-2759, November 2021