Edward Eastman knew he was looking at a once-in-a-lifetime opportunity.

It was 1888, and the Oregon City banker had been hearing about the electric revolution that was sweeping across the country.

And as it turned out, Oregon City was home to Willamette Falls, a perfect place to generate hydroelectric power.

So Eastman started the Willamette Falls Electric Company and installed a dynamo in a paper mill on the river.

Willamette Falls Electric Company in the 1880s
Source: Portland General Electric

Oregon City was a small town that didn’t need much electricity. But Eastman knew there was real money to be made if he could get the electricity over to Portland.

The only problem was that Portland was 14 miles away. Nobody had ever tried sending electricity that far before.

When electricity flows through wires, some of it is turned into heat and lost. That’s why most power plants were located close to the cities back then.

So Eastman tried out a new idea: converting the electricity to 1000 volts and sending it through power lines at a lower current to reduce the amount of energy lost. Then on the other end, it could be converted back to the commonly used 100-volt power.

It worked. On June 3, 1889, the first high-voltage transmission line brought 4,000 watts of electricity from Willamette Falls to Portland.

Eastman’s company would eventually become a part of Portland General Electric (POR).

To this day, the power station at Willamette Falls is still generating electricity – and great profits.

Here at the Intelligent Income Daily, we’re focused on finding the safest income investments on the market. Utility companies are some of the most stable dividend payers because they have a legal monopoly and there is a constant demand for electricity.

Today I want to show you why there’s a growing need for more energy infrastructure and why this will help utilities increase their earnings. I’ll also give you the names of three attractively priced utilities.

The Need for More Energy Infrastructure

Today, there are more than 240,000 miles of high-voltage transmission lines in the US. That’s enough to go around the world nearly 10 times.

But it’s not enough.

Major trends are changing how electricity is produced and used, creating more and more demand for transmission lines.

One reason is the increasing number of renewable energy projects. According to a report from the Lawrence Berkeley National Laboratory, there are over 10,200 projects asking for a connection to the grid. These are often located in remote areas and need long transmission lines to bring electricity to cities where it is used.

Another reason is the increasing number of electric vehicles (“EVs”). An average EV uses about 4,500 kWh of electricity a year. In comparison, the average household currently uses about 11,000 kWh of electricity every year. So switching to EVs would increase electricity use by 40%.

The increasing use of artificial intelligence is also using more energy. According to estimates, each ChatGPT request uses between 3 to 30 times more energy than a Google search.

All this extra demand for electricity means the transmission capacity in existing grids also needs to be upgraded. In Virginia, data centers are getting delayed because local utilities can’t keep up with the high demand for electricity. It’s not that they’re not producing enough power – they just don’t have enough lines to get it where it needs to go.

This all adds up to a golden opportunity for utilities to build a lot more energy infrastructure.

Three Attractive Energy Infrastructure Plays

As I showed you previously, regulators allow utilities to earn more money when they build things that are needed to serve their customers.

Plus, the Infrastructure Investment and Jobs Act and the Inflation Reduction Act are adding billions of dollars in government funding to improve the grid. That money will help utilities fund the projects they need to build.

Here are three utilities that are attractive today…

• Entergy Corporation (ETR) provides electricity in Arkansas, Louisiana, Mississippi and Texas. It yields 4.2% and has increased its dividend 8 years in a row. It trades at 15x earnings, the lowest valuation since the pandemic.

• Sempra (SRE) provides electricity in Texas and California. It also owns some natural gas infrastructure. It yields 3.2% and has grown its dividend for 20 years. Shares currently trade at 16x earnings compared to an average of 19x over the past decade.

• American Electric Power (AEP) provides electricity to customers across 11 states in the Midwest. It yields 3.9% and has a 13-year dividend growth streak. It currently trades at 16x earnings compared to an average of 18x over the past decade.

In many states, the local utilities have the “right of first refusal” (or first dibs) when it comes to building new transmission lines.

The need to connect renewable energy projects, growing demand for electricity, and government funding for infrastructure will help these utilities keep growing their earnings and dividends for many years to come.

And utilities are one of the select mission-critical company types that can reliably build income in the long term, no matter the economic environment. For more in-depth research into plays like these, consider signing up for the Intelligent Income Investor.

We just released a special report on how to invest in the mission-critical infrastructure that’s powering the economy. And we’ve found a little-known way to secure a reliable stream of income from these assets. To find out more, check it out here.

Happy SWAN (sleep well at night) investing,

Brad Thomas
Editor, Intelligent Income Daily