In this article, we discuss the 5 European utility stocks to buy now. If you want to read our discussion on the developments in the European utility sector, go directly to 10 European Utility Stocks to Buy Now.
5. ENGIE SA (OTC:ENGIY)
Market Capitalization: $32.03 billion
ENGIE SA (OTC:ENGIY) is a La Défense, France-based utility company involved in generating and transmitting energy through natural gas, nuclear, and renewable energy sources.
ENGIE SA (OTC:ENGIY) offers an attractive dividend yield of 6.83% as of August 17. The yield translates into a forward annual dividend of $0.90 per share.
According to experts, ENGIE SA (OTC:ENGIY) is delivering on its restructuring plan. All the headline numbers in the financial statements came in above the consensus forecasts for Q2 2022. ENGIE SA (OTC:ENGIY) has been able to lower its dependence on Russian natural gas from 15 terawatt hours to four terawatt hours only as of the second quarter of the year. Like E.ON SE (OTC:EONGY), the company also reduced its stake in the Nord Stream 1 gas pipeline from $609.9 million to $304.6. Furthermore, ENGIE SA (OTC:ENGIY) has geared itself to survive the extreme weather without the need for Russian natural gas. The lack of reliance on Russian gas sets the company apart from its competitors.
4. Ørsted A/S (OTC:DNNGY)
Market Capitalization: $45.96 billion
Ørsted A/S (OTC:DNNGY) is a Fredericia, Denmark-based energy company. The company is the biggest producer of electricity through offshore wind power in the world.
Ørsted A/S (OTC:DNNGY), previously known as Danish Oil and Natural Gas (DONG) Energy, transitioned from being a coal, natural gas, and crude oil company to a firm that now relies on wind and solar power. Other European integrated energy companies like Shell plc (NYSE:SHEL) and TotalEnergies SE (NYSE:TTE) are following the same path.
According to a report issued by McKinsey, Ørsted A/S (OTC:DNNGY) has an offshore wind capacity of 4.4 gigawatts (GW) as of 2020 and plans to increase it to 13GW by 2030. The company has over 15 offshore wind auctions and tenders scheduled for 2022-2023. Among the international prospects, there are five projects in the US, two in the Netherlands, and one in Ireland in the pipeline. Investors must note that one ADR of Ørsted A/S (OTC:DNNGY) is equivalent to one-third of a common share listed on the Copenhagen stock exchange.
3. National Grid plc (NYSE:NGG)
Market Capitalization: $52.21 billion
National Grid plc (NYSE:NGG) is a London, England-based electricity and natural gas utility company.
National Grid plc (NYSE:NGG) stock offers an attractive forward dividend yield of over 4.5%. The yield translates into a quarterly dividend of $0.81 per share.
On August 16, National Grid (NYSE:NGG) revealed that it had discovered strong supplies of green hydrogen and renewable gas for prospective use by New York and Massachusetts-based customers. This will help the company fulfill its objectives of having a 100% fossil-free gas network by the year 2050. According to National Grid plc (NYSE:NGG), a total of at least 33T BTUs will be accessible for the company in the following three years, which is more than twice the 15T BTUs required in 2025.
In a note issued to investors on June 24, Mark Freshney at Credit Suisse reiterated an Outperform rating on National Grid plc (NYSE:NGG) stock and increased the target price from $72.60 to $74.10.
ClearBridge Investments shared its stance on National Grid plc (NYSE:NGG) in its Q2 2022 investor letter. Here’s what the firm said:
“Defensive sectors — electric, gas and water — saw some profit taking globally after a strong start to the year, with National Grid plc (NYSE:NGG) and SSE (OTCPK:SSEZF) in the U.K. the main individual detractors. Energy infrastructure, mostly in Canada, performed poorly on profit taking, as the strong demand for commodities, which has been driven by structural underinvestment and supply disruptions related to the war in Ukraine and which led to exceptional performance in the first quarter, was overpowered by concerns of how a global recession would impact demand.”
According to Insider Monkey’s proprietary data, 10 hedge funds held a stake in National Grid plc (NYSE:NGG) as of the second quarter of 2022.
2. Enel SpA (OTC:ENLAY)
Market Capitalization: $52.55 billion
Enel SpA (OTC:ENLAY) is a Rome, Italy-based electricity and natural gas distributor.
The company plans on transitioning to renewable energy sources for power generation in the future. Enel SpA (OTC:ENLAY) intends to conduct a capital expenditure outlay of nearly $173 billion from 2021 to 2030 in line with its decarbonization goals.
Amongst all the utility companies covered in this list, Enel SpA (OTC:ENLAY) has the highest forward dividend yield of 7.45% as of August 17. For the first half of 2022, the company saw its revenue increase by 85.3% YoY to $68.39 billion. Meanwhile, GAAP EPS was posted at 16 cents. According to the management, Enel SpA (OTC:ENLAY) will increase its renewable energy capacity by 84 GW over the course of this decade. This would include energy storage of 9 GW. By 2030, the company’s fleet will have a capacity of 129 GW.
1. Iberdrola, S.A. (OTC:IBDRY)
Market Capitalization: $68.46 billion
Iberdrola, S.A. (OTC:IBDRY) is a Bilbao, Spain-based utility company.
Iberdrola, S.A. (OTC:IBDRY) has partnered with BP plc (NYSE:BP) and plans to invest $1 billion in the field of electric vehicle (EV) charging. The company plans to work toward developing green large-scale hydrogen production capabilities. The initiative intends to roll out 11,000 fast EV charging points across Spain and Portugal by 2030. Furthermore, the project intends to launch 5,000 fast EV charging points by 2025. BP will be able to leverage its network of 1,300 retail sites across both countries.
On August 10, Iberdrola, S.A. (OTC:IBDRY) brought the biggest solar power plant in Europe into operation. The $305 million Francisco Pizzaro PV array has a potential capacity of 590MW and will provide power to 335,000 homes in the region. The plant will lower carbon emissions by 150,000 tons every year. Iberdrola, S.A. (OTC:IBDRY) intends to increase its renewable energy installed capacity to 25 GW in the upcoming years from its current total of over 19.3 GW.
You can also take a peek at the 10 Best Dividend Stocks to Buy in 2022 and 12 Best FMCG Stocks to Buy Now.
