Aggressive Income Feature

American electricity demand is growing at its fastest rate since the 1960s. But more than 90 percent of global power demand growth from 2016 through 2023 was in Asia. According to the World Economic Forum, the continent will use half the world’s electricity next year. And China alone will use 33 percent, up from just 10 percent in 2000.

Steadily growing cash flow and dividends by adding long-term contracted power generation: That’s been Clearway Energy’s (NYSE: CWEN) successful strategy for the decade plus since former parent NRG Energy (NYSE: NRG) launched it as NRG Yield. And the company continues to thrive under Clearway Group 54.91% of voting shares, 42.12% economic interest), which is owned by TotalEnergies (Paris: TTE, NYSE: TTE) and Blackrock/GIP.

In a year of foolish politics-based investing decisions, giving up on Mexico ranks highly. Since mid-April, the Peso has lost more than -15 percent of its US dollar value. And that’s pushed America Movil (Mexico: AMXB, NYSE: AMX) ADRs down -10.8 percent year to date, despite consistent strong operating results. The politics case for selling Mexico partly stems from the overwhelming victory of the Morena party in the country’s recent elections, resulting in a controversial justice system overhaul. The other half is fear of potential dislocations from a prospective Trump presidency.

Fool me once shame on you, but fool me twice shame on me: That seems to be what many think of AES Corp (NYSE: AES), selling for 8.2 times expected next 12 months earnings and yielding north of 4 percent. In contrast, Wall Street is positive, with 10 research houses tracked by Bloomberg Intelligence rating buy versus 3 holds and no sells. And management raised 2024 earnings and EBITDA guidance in early August, reaffirming expected annual growth of 7 to 9 percent for earnings and 5 to 7 percent for EBITDA through 2027.

From April 2016 through January 2021, we earned roughly 300 percent on Hannon Armstrong Sustainable Infrastructure (NYSE: HASI). We took that profit. But when the stock dropped by more than half during a successful business year, I couldn’t resist re-entry. And despite growing revenue 78 percent, net income 50 percent and dividends by18.5 percent, the company has been the portfolio’s worst performer since.

Italy closed the last of its operating nuclear reactors in 1990, following a 1987 post-Chernobyl referendum. But earlier this year, Enel SpA (Italy: ENEL, OTC: ENLAY) and Ansaldo Nucleare forged an agreement to develop new nuclear reactors, with support of the country’s Ministry of Environment and Energy Security. Enel’s Endesa unit operates several reactors in Spain, which at this point has a plan to phase out nuclear energy by 2035. But like Italy, the country is now reconsidering its options. And as the largest power producer in both countries, the company is poised to capture what business emerges.

Last year, Aggressive Holding MDU Resources (NYSE: MDU) spun off its construction materials unit as Knife River (NYSE: KNF). Since then, the shares of KNF that MDU investors received per a 1-for-4 ratio have appreciated by roughly 75 percent. Now MDU is spinning out its larger construction services business as Everus, in a deal expected “in late 2024.” The unit reported all-time record order backlog in Q1. And with growth opportunities including data center development and industrial reshoring, its launch promises to attract even more interest.

When a stock sells for just 7.7 times expected next 12 months earnings, it’s clearly unloved by investors. And that’s clearly the case for America’s number 3 telecom AT&T Inc (NYSE: T), after returning less than 3 percent a year over the past decade. There are numerous reasons for AT&T’s underperformance. But the biggest was US government rejection of its proposed merger with T-Mobile US (NSDQ: TMUS), which led to a disastrous, debt-expanding foray into the entertainment business. And the company has dealt with the fallout ever since, including a first-ever -46.6 percent dividend cut as part of the Warner Brothers (NSDQ: WBD) spinoff in April 2022.

Earlier this year, what promised to be an Atlantic Coast offshore wind boom seemed to go bust. Lead developer Orsted A/S (Denmark: ORSTED, OTC: DNNGY) ousted upper management and wrote off $6 billion in shelved US projects, citing development cost spikes and uneconomic contracts. And its 50 percent partner EverSource Energy’s (NYSE: ES) felt its pain, taking a $5.58 per share impairment charge against Q4 earnings. EverSource’s plan all along has been to sell its ownership of the offshore projects to focus on linking transmission infrastructure. The writedown reflected the diminished value of those assets. But it now appears the demise of US offshore wind was indeed greatly exaggerated.

It’s fair to say that Algonquin Power & Utilities (TSX: AQN, NYSE: AQN) has been a problematic recommendation the past few years. Aggressive expansion boosted profits for years, then suddenly hit a brick wall of rising borrowing costs. And Kentucky regulators broke up the acquisition of American Electric Power’s (NYSE: AEP) operations in that state. But after boosting Q4 earnings and EBITDA by 14 and 13 percent, respectively, Algonquin’s core business is strengthening again. And the long awaited sale of non-utility assets may happen as soon as mid-year—lifting the long-lagging share price with massive debt reduction and stock buybacks. Operating profit at Algonquin’s regulated utilities in 2023 increased by 10.5 percent, thanks largely to rate increases paying for system investments. That will be the major driver of growth in 2024 and beyond, along with systematic cost management. During the earnings call, management highlighted $105.8 million pending rate increase requests to be decided this year.