Editor’s Note: We’re turning once again to income investing expert Brad Thomas…
Longtime readers may remember Brad. He’s the former real estate developer who lost it all in the 2008 housing crash. But he rebuilt his fortune using his “sleep well at night” investing strategy that focuses on building safe, reliable income streams in the stock market.
And he’s got his eye on an income play that lets you profit from an upgrade coming to “the world’s biggest machine”…
The U.S. power grid.
But first, today’s market action…
Market Data
The S&P 500 closed up one point to end the day at 5,071.63… the NASDAQ added 0.1% to close at 15,712.75.
In commodities, West Texas Intermediate crude oil trades at $82.92, down 40 cents…
Gold is $2,332 per troy ounce, down $4 from yesterday…
And bitcoin is $64,043, down $2,221 since yesterday.
Back to Brad…
Edward Eastman knew he was facing a once-in-a-lifetime opportunity.
It was 1888, and the Oregon City banker had heard about the electric revolution sweeping across the country.
Oregon City happened to be home to Willamette Falls, a perfect place to generate cheap hydroelectric power.
Back in 1888, most power plants were located close to cities because electricity couldn’t be sent very far. When electricity flows through wires, some of it is turned into heat and lost.
Unfortunately, there weren’t many people living in Oregon City. So there wasn’t enough demand for all the electricity the river could produce.
If only there were a way to bring the power to the city of Portland, just 14 miles away…
So Eastman figured out a way around the problem… By converting the electricity to a very high voltage, he could send it farther without losing as much power.
On June 3, 1889, he helped create the first high-voltage transmission line. It connected 4,000 watts of electricity from Willamette Falls to Portland. And it brought cheap hydroelectric power to a big city for the first time, where there was more demand and higher profits.
That hydroelectric station is still producing electricity to this day.
Today, the once-in-a-lifetime opportunity Eastman found is coming back again. And I’ll show you one way to profit while collecting a reliable income.
The Power Transmission Problem
The world’s biggest machine needs a major upgrade.
I’m talking about the U.S. power grid.
It’s made up of over 11,000 power plants, about 700,000 miles of transmission lines, and more than 5 million miles of local power distribution lines.
It’s a critical part of our daily lives.
But it has a major weak link – the transmission network.
More than half of the country’s transmission lines were installed before 1970. And every year, we’re asking those aging power lines to handle more and more electricity.
The system is being pushed to the limits of what it can handle.
For many decades, electricity demand grew at a slow pace. But now, artificial intelligence (AI), electric vehicles (EVs), and clean manufacturing are using up huge amounts of power. This sudden increase in demand for electricity is straining the grid.
According to a recent report from the Lawrence Berkeley National Laboratory, there are 2.6 terawatts of power waiting to connect to the grid. That’s twice as much capacity as America currently has.
But most of those projects are stuck. The problem isn’t space. There are plenty of places where new power plants could be built. The problem is there aren’t enough transmission lines.
Just like back in 1888, many of the best places for cheap renewable power today are in places far away from major cities where most of the demand is.
Last year, the Department of Energy released its first National Transmission Needs study.
It shows we need to expand the country’s transmission system by 57% by 2035 to match current demand growth and clean energy policies.
That means we should be building more than 33,000 miles of transmission each year. But in 2022, less than 700 miles of transmission lines were built.
That’s why the Department of Energy just launched “the largest ever investment in America’s grid.” The 2021 Bipartisan Infrastructure Law set aside more than $10 billion to spend on the country’s transmission system.
That money will help jumpstart transmission projects that are desperately needed. And at Intelligent Income Daily, when we see the government inject cash into an initiative, we pay close attention to who will benefit the most…
One Company That Will Benefit
One of the companies set to profit from the need to build new transmission lines is Xcel Energy (XEL).
Xcel Energy is an electric utility that serves customers in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin.
These are parts of the country that will have the highest need for transmission. And Xcel Energy has a good chance of winning government grants to finance those projects.
Xcel Energy won one of the biggest awards from the first round of Department of Energy funding to help build transmission projects across seven Midwest states.
So the company is already collecting free money to build infrastructure projects that will boost its earnings for decades to come.
Xcel Energy yields 4.2% and has increased its dividend 21 years in a row. So it has a long history of providing reliable income.
Its shares trade at 15x earnings. That’s a 25% discount compared to its average of 20x earnings over the past decade.
Right now, we have an opportunity to profit from the urgent need for upgrades to our country’s power grid. And Xcel Energy is a great option to do that today and earn reliable income.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily
More Markets
Today’s top gaining ETFs…
-
Invesco China Technology ETF (CQQQ) +2.9%
-
SPDR S&P Semiconductor ETF (XSD) +2.3%
-
First Trust Nasdaq Semiconductor ETF (FTXL) +1.8%
-
iShares Semiconductor ETF (SOXX) +1.3%
-
FlexShares STOXX Global ESG Select Index Fund (ESGG) +1.1%
Today’s biggest losing ETFs…
-
First Trust Brazil AlphaDEX Fund (FBZ) -1.5%
-
Invesco Dorsey Wright Healthcare Momentum ETF (PTH) -1.4%
-
Global X MSCI Colombia ETF (GXG) -1.4%
-
Pacer Benchmark Industrial Real Estate SCTR ETF (INDS) -1.3%
-
Pacer US Small Cap Cash Cows 100 ETF (CALF) -1.2%