TSI’s Scott Clayton has identified seven enterprises at the forefront of nuclear energy. Each one has been selected for dividend sustainability and growth potential using our 12-point rating system to emphasize multi-year dividend growth, strong balance sheets, and consistent earnings.
Among the final selections is a North American uranium producer that plays an integral role in the global nuclear fuel supply chain. Joining it is an engineering and services leader that specializes in guiding regulatory compliance and managing nuclear waste for major facilities. Also included is a U.S.-based manufacturer renowned for supplying critical nuclear components and medical isotopes. Rounding out the group are a major power producer operating the largest fleet of nuclear reactors in the country, and a diversified utility that generates a significant share of its electricity from nuclear plants.
Each of these companies demonstrates robust cash flow, a multi-year track record of reliable dividends, and increased institutional investor confidence. They share strategic advantages such as essential roles in clean energy infrastructure, recurring revenues from regulated markets, high barriers to entry, prudent debt management, and executive teams focused on shareholder interests. Their selection reflects a disciplined approach to balancing income needs with capital preservation.
That gives you the best chance of achieving strong returns even amid recent market volatility.
Excerpt from theglobeandmail.com
What are we looking for?
Reliable dividends from companies tapping demand for nuclear energy – increasingly seen as a cheap and clean way to power artificial intelligence (AI).
The screen
Meta Platforms Inc. spurred nuclear power stocks this week after announcing a 20-year supply deal with nuclear energy giant Constellation Energy Corp. Financial terms weren’t disclosed, but the Meta deal should help Constellation cover the costs of upgrading and relicensing its nuclear reactors and maintaining one of its facility. The contract is also the latest in a string of industry agreements with AI computing leaders, now grappling with the high-electricity needs of those computer applications.
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The outlook for the nuclear industry had been uncertain since Japan idled its own program in the wake of the 2011 Fukushima disaster. However, our analysts at TSI Network point out that nuclear power has regained interest over the last several years. The environmental push for carbon-free electricity generation as well as Europe’s hunt for a long-term replacement for Russian natural gas have driven the turnaround.
The growing use of energy-thirsty datacentres to power AI has been another spur.
For this search, we focused on top U.S. and Canadian firms tied to nuclear power deployment and poised to gain from industry trends. We then applied our TSI Dividend Sustainability Rating System, which awards points to a stock based on key factors:
- One point for five years of continuous dividend payments – two points for more than five
- Two points if it has raised the payment in the past five years
- One point for management’s commitment to dividends
- One point for operating in non-cyclical industries
- One point for limited exposure to foreign currency rates and freedom from political interference
- Two points for a strong balance sheet, including manageable debt and adequate cash
- Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments
- One point for an industry leader
Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.
7 nuclear energy stocks you’ll want for reliable income
Cameco Corp. (with a 0.2% yield), headquartered in Saskatoon, is one of the world’s largest producers of uranium. It also holds 49% of Westinghouse Electric Company, which serves about half of the world’s nuclear power reactors.
Ottawa’s Calian Group Ltd. (2.8%) provides an array of services to Canadian private and public sector clients – including interpreting regulatory requirements and developing licensing strategies for the nuclear industry. It also offers nuclear waste management and plant decommissioning.
BWX Technologies Inc. (0.8%), headquartered in Virginia, is a leading maker and supplier of nuclear components, reactors and fuel to the U.S. government and private sector. It also provides medical radioisotopes and more.
Meanwhile, here are some power producers primed to benefit from renewed interest in nuclear power:
NextEra Energy Inc. (3.2%), based in Florida, is a holding company for Florida Power & Light Co. It gets about a fifth of its power from nuclear plants in the state as well as New Hampshire and Wisconsin.
Constellation Energy Corp. (0.5%), headquartered in Baltimore, operates the largest fleet of nuclear plants in the U.S., with its 21 reactors generating 70% of its output.
Duke Energy Corp. (3.6%), based in North Carolina, is one of the largest energy producers in the U.S. About 30% of its electricity comes from 11 nuclear units at six sites in North Carolina and South Carolina.
And finally, Virginia-based Dominion Energy Inc. (4.8%) gets about 26% of its power from its four nuclear plants.
We advise investors to do additional research on investments we identify here.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
