A World of Opportunity

Patiently buying and holding shares of high-quality dividend payers is the surest way to build sustainable wealth. Surveying the more than 200 essential-service stocks that we cover in our Utility Report Card reveals that many of the best opportunities in the current market involve companies that are domiciled outside the US.

China’s economic slowdown continues to dominate the headlines. But the country last year invested US$103 billion in renewable energy, about 36 percent of the global total and more than the US ($44 billion) and Japan (US$36.2 billion) combined.

The Mainland has also emerged as the world’s largest market for electric vehicles, spurred in part by government subsidies and billions of dollars invested into charging stations and grid infrastructure.

China is also in the midst of a US$330 billion spending campaign to improve the quality and reliability of its water supply, an effort that continues to create growth opportunities for Aggressive Income Portfolio holding Suez Environnement (Paris: SEV, OTC: SZEVY).

India, the world’s second most populous nation, has also stepped up investment in renewable energy. Aggressive Income Portfolio member CLP Holdings (Hong Kong: 2, OTC: CLPHY) offers exposure to this trend as well as China’s push for clean energy.

Growth opportunities also abound in developed markets, with analysts from Goldman Sachs (NYSE: GS) calling for a “capital spending super-cycle” for Europe-based utilities that could reach EUR700 billion (US$787 billion).

The primary drivers of this wave of capital spending should be familiar to investors in US utilities: necessary upgrades and enhancements to the power grid to improve system reliability and accommodate growing adoption of intermittent power sources.

Even fossil fuel-rich Australia and Canada plan to invest billions of dollars in renewable energy and gas-fired power plants, with the aim of reducing their reliance on coal-fired power plants.