David Nelson, CFA
David Nelson, CFA, is chief strategist at Belpointe Asset Management, which oversees more than $400 million in assets, Greenwich, Connecticut. Belpointe.com
Utilities, which produce electricity for millions of people, are one of the hottest areas in the stock market this year. Because they are heavily regulated and grow slowly, they’re typically ignored by most small investors. But now power companies are a surprising beneficiary of the artificial-intelligence (AI) boom. Vast amounts of electricity are needed to run AI data centers that house servers for super-high-speed computing and cloud storage. While annual growth of power generation has averaged only 0.5% over the past 20 years, it’s now projected to grow five times as fast for the next decade in the US. Three investments to consider…
Cameco Corp. (CCJ). The Canadian nuclear-fuel producer should benefit from the US government’s announcement that it wants to purchase $3.4 billion worth of enriched uranium to wean US nuclear power plants away from Russian imports. Recent yield: 0.17%.*
Constellation Energy (CEG), the country’s leading nuclear power plant operator, has the capacity to provide electricity to more than 16 million homes and businesses. Because the utility’s prices are not state-regulated, it can sell power at competitive rates without government permission. Constellation has reached an agreement to supply power for one of Microsoft’s major data centers. Recent yield: 0.65%.
Virtus Reaves Utilities ETF (UTES). If you don’t want to bet on individual stocks, this actively managed fund, ranked five stars by Morningstar, owns a portfolio of 19 utility stocks, including Constellation Energy and major players such as NextEra Energy and Vistra Corp. Recent yield: 2.05%.
