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Winnipeg Free Press
02-08-2025
- Business
- Winnipeg Free Press
Nuclear option
Opinion The quest for more power to meet rising demand from electric vehicles and data centres running artificial intelligence technology has led to an apparent 'renaissance' of nuclear energy. The White House recently posted an op-ed piece exalting U.S. President Donald Trump's executive orders for reinvigorating America's nuclear power generation using that just that term, while effusively lauding his agenda to increase the nation's output by 300 gigawatts by 2050. That's enough to power about 300 million homes or, more likely, thousands of data centres for AI, as well as millions of EVs. Climate change commitments may not be high on the U.S. president's mind, but it is on China's list, as it seeks to add as much as 400 GW more from atomic energy by 2050 while aiming to decarbonize its economy. It's arguably off a faster start with 119 GW of nuclear power generation in construction or development. India is next in activity with 32 GW potentially under development. The United States is much further behind at eight GW, even trailing nations like France and Poland. Actual activity and planned growth suggests trillions of dollars being invested in nuclear energy over the coming decades — and investors are intrigued. 'The ducks are coming in a row, finally,' says Scott Clayton, Toronto-based senior analyst for the Canadian Wealth Advisor with the TSI Network in Toronto. The last time nuclear energy was on an upswing with investors was in the 2000s as oil prices surged. Then, the Fukushima plant disaster in Japan in 2011 put the brakes on nuclear power. Companies like Cameco Corp. — based in Saskatoon and the world's largest uranium producer — saw growth put on ice. That is until recently. Today, Cameco's share price, fuelled largely by all the talk of plans for new reactors, is at all-time highs. Although Canada may be an oil and gas powerhouse, its potential as a supplier of the fuel for nuclear energy has arguably more upside. It has the third largest discovered reserves in the world. It is also the second-largest producer behind Kazakhstan and potentially much more production is coming, as exploration companies like NexGen Energy and Paladin Energy look to develop mines in the Athabasca Basin (home to the highest-grade deposits of uranium in the world). Yet before jumping into a surging industry, driven by the future promise of much more nuclear power (not to mention the unnerving revival of the nuclear arms race), let's splash a bit of cold water on the overheating rods of speculation. 'It still faces challenges,' Clayton says. Among them are regulatory concerns. Mining projects in Canada take a notoriously long time to be approved and uranium is particularly tricky, given its environmental impact. Power plants are equally complicated. The public might appreciate the cheap, abundant power, just don't generate it close to where they live. 'The other problem is that the costs (of construction) are just astronomical,' Clayton says. The newest nuclear power generating station in the U.S, for example — two reactors at Plant Vogtle in Georgia — cost US$35 billion and were behind schedule and over budget. 'We definitely think it's (nuclear energy) going to be needed,' says Andrew Bischof, senior equity analyst at Morningstar in Chicago. Yet many projects are far from construction, let alone completion, and a history exists of projects being cancelled, especially in the U.S. Bischof says many major utility companies are talking about amping up nuclear power, but those are far-away ambitions, part of five- and 10-year plans to build capacity, which could take several more years before that power is added to the grid. There does seem to be more buzz around small modular reactors, he adds. These are scaled-down power plants that take less time to build, but it's an emerging technology. To that end, Canada is a leader with a project underway in Darlington, Ont. 'Duke Energy has also mildly stated that it's exploring SMRs, but again, that is 2030 to 2035 for a time frame,' Bischof says about the U.S. power provider, which presently has six nuclear power plants in the U.S.. Notably, big tech — Microsoft, Meta and Alphabet (Google) — are considering or currently entering into contracts with power providers, providing cash up front to restart or build new nuclear capacity, often involving small reactors, to meet climate change goals and growing energy-hungry AI capabilities. The need is substantial. AI is forecast to eat up 20 per cent of new energy growth through 2030. EV expansion is expected to increase demand by 15 per cent. Whether all this growth translates into future profits remains to be seen. In the meantime, investors might consider risk-adjusted exposure. 'If you're looking to invest in more speculative areas, it's best to get exposure through stocks that already have a solid business,' Clayton says. He points to U.S.-based Constellation Energy Corp. as one viable choice. Nearly 70 per cent of its output is nuclear and it pays a small dividend (0.47 per cent yield). Another way to invest in this theme is exchange-traded funds (ETFs). Investors have close to a handful of choices. One of the longest running is VanEck Uranium and Nuclear ETF, launched in 2007. It has seen renewed popularity, after peaking in price around 2011. '(Its) recent asset growth mirrors a broader nuclear renaissance fueled by surging electricity demand, the global pursuit of dependable low carbon power and fresh policy support extending plant life and financing next generation reactors,' says Brandon Rakszawski, director of product management, VanEck in New York. Monday Mornings The latest local business news and a lookahead to the coming week. Its portfolio also holds the aforementioned stocks with Constellation and Cameco among the largest positions. While the stars might be aligning for nuclear, conditions quickly change — i.e. battery power for renewables — that could make a long-term investment in nuclear suddenly less ideal. Still, for investors with an appetite for risk and a long time horizon, the nuclear option could power long-term profitability. Joel Schlesinger is a Winnipeg-based freelance journalist joelschles@
Globe and Mail
19-06-2025
- Business
- Globe and Mail
Dividend-paying conglomerates with break-up potential that may reward investors
Sustainable dividends from conglomerates well placed to unlock holding company discounts. Honeywell International Inc. HON-Q shares rose early this week after the industrial conglomerate reiterated plans to split into three independent companies. The move, spurred by activist investor Elliott Investment Management, should further lift Honeywell's share price and so shrink its 'holding company discount.' That's the tendency for multifaceted conglomerates to trade for less than the total value of their various parts. Holding companies often see their share prices rise after opting to break themselves up into their constituent businesses. Essentially, the market finds it easier to assess the value of 'pure-play' firms. We started with our extensive list of dividend-paying Canadian and U.S. companies, before singling out conglomerates offering steady growth prospects – as well as breakup potential. We then applied our TSI Dividend Sustainability Rating System to home in on top dividend payers. Our system awards points to a stock based on key factors: 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. TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management. Our TSI Dividend Sustainability Rating System generated five stocks: Montreal-based Power Corp. of Canada POW-T holds controlling interest in Great-West Lifeco Inc., IGM Financial Inc. and much more. Calgary-headquartered ATCO Ltd. ACO-X-T owns 52.5 per cent of Canadian Utilities Ltd. CU-T but also ATCO Structures & Logistics and 40 per cent of Neltume Ports; the latter operates 18 ports and related operations in South America. Honeywell International Inc., based in North Carolina, had already spun off two subsidiaries (Resideo Technologies Inc. and Garrett Motion Inc. GTX-Q) to shareholders in 2018 and now plans to break up even further. Global conglomerate 3M Co. MMM-N, with headquarters in Minnesota, sells a wide array of products with little overlap and so has a lot of breakup potential. In fact, it spun off its health care unit as Solventum Corp. SOLV-N last year. Washington-based Danaher Inc. DHR-N has made a number of breakup moves in the past but still has a varied range of businesses well-positioned for hiving off as standalone firms. 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.
Globe and Mail
08-05-2025
- Business
- Globe and Mail
Sustainable dividends from cell-tower providers poised for growth
What are we looking for? Sustainable dividends from cell-tower providers poised for growth. The screen Telus Corp. T-T is exploring a possible sale of 49.5 per cent of its cell-tower network in an effort to pay down debt. That stake could attract as much as $1-billion, while keeping Telus in control of a network with some 3,000 towers spread across key markets. Like Telus, all tower companies own and operate the physical structures, themselves, but it falls to the mobile network operators that lease space on those structures to install and maintain their broadcast equipment. As our TSI analysts point out, the arrangement makes for a diversity of customers leasing space on any given tower. Our search started with dividend-paying cell-tower operators. From there, we focused on established players well positioned for cash-flow growth as demand rises and the industry's high barriers to entry keep out new competitors. From there, we applied our TSI Dividend Sustainability Rating System, awarding points to a stock based on key factors: 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. More about TSI Network TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management. What we found Our TSI Dividend Sustainability Rating System generated five stocks. American Tower Corp. AMT-N, based in Boston, is the largest independent operator of wireless telecom and broadcast towers, with more than 149,000 sites worldwide. Headquartered in Houston, Tex., Crown Castle Inc. CCI-N owns and operates more than 40,000 cell towers throughout the U.S. Not that the company is planning to sell its fibre business and will cut its dividend by 32.1 per cent later this year to reflect the loss of those assets. SBA Communications Corp., SBAC-Q based in Boca Raton, Fla., owns and operates towers, principally in the U.S., but also South America, Central America, Canada and Africa; all together, that's almost 40,000 towers. DigitalBridge Group Inc., DBRG-N also headquartered in Boca Raton, is a global digital infrastructure investment firm. The company owns, invests in and operates businesses such as cell towers and data centres. These interests include Vertical Bridge, with more than 17,000 towers. And finally, Vancouver's Telus continues to profit from selling telecom services to Canadians. The unlocking of value with the sale of the cell-tower stake, combined with Telus's move to retain controlling interest, will further support its high dividend. 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.
