by Bryan Perry

May 25, 2021

Not a day goes by without investors finding new articles addressing green energy in their email inboxes. “Green” is trending red hot. The global and domestic narrative over enhancing the transition to green energy usage is embedded in local, state, federal, and international agendas, laws and regulations that aim for net-zero-carbon emissions in the world by 2050.

There is reason to be optimistic about reaching such a lofty goal, as there is no shortage of capital pouring into the green space armed to fund this endeavor. Total investment in renewable-energy projects, electric vehicles, and other green efforts exceeded $520 billion last year, a record, according to Bloomberg New Energy Finance, which tracks green investments. Green spending was up 12% from a year earlier and up nearly 60% from 2015, according to Bloomberg data – all despite the pandemic and steep 2020 recession.

The Wall Street Journal reported this past weekend that, “as recently as 2014, the world’s energy companies spent $735 billion on oil-and-gas extraction. The figure was less than half that last year, while spending on wind and solar projects rose to nearly $220 billion, up from about $135 billion six years earlier, according to Rystad Energy, a consulting firm. Some analysts predict spending on renewable energy will exceed oil and gas in the next several years.”

Green Energy Spending Charts

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The Journal article goes on to state that consulting firm “Wood Mackenzie has estimated that at least $50 trillion in investment will be needed to reduce fossil fuel and other greenhouse-gas emissions by 2050 to meet the goals of the Paris climate accord. Roughly half of that money, the firm said, needs to go to areas such as wind and solar power and battery storage. Another $18 trillion is needed to modernize the electric grid, in part to transition to cleaner energies such as solar and wind.”

“Assets in investment funds focused partly on the environment reached almost $2 trillion globally in the first quarter, more than tripling in three years. Investors are putting $3 billion a day into these funds. More than $5 billion worth of bonds and loans designed to fund green initiatives are now issued every day. The two biggest U.S. banks pledged $4 trillion in climate-oriented financing over the next decade.”

With the mighty tailwinds of capital being deployed by Wall Street, global institutional investors, retail investors, the Biden proposals, and those around the world by governments in a race to see who can save the planet from itself fast enough, the obvious question for income investors is who the biggest publicly listed winners are going to be, and are there green energy plays that pay juicy yields.

That is a quandary, since the ESG movement is still relatively young in terms of its scaling up, and almost all assets dedicated to ESG energy projects are purely organic growth investments in nature. Finding yield with good risk/reward profiles is a challenge, yet there are some places for income investors to examine.

One place would be the electric utilities sector of the market. Historically, the power utility stocks underperform during periods of inflation, as capital rotates into more cyclical sectors of the market more leveraged to inflationary forces and upward pricing pressures. But this time around is different. The multi-trillion-dollar transformation to green and renewable energy will in my view have an insulating effect on how utility stocks trade going forward, resulting from upward revisions in rates of growth.

Even with bond yields ticking higher, America and the rest of the developed and emerging market economies are fast moving to transition from fossil fuels to renewable sources of energy. These companies are on the receiving end of current and future massive capital inflows and it can be argued that these stocks are trading near or at new all-time highs due to the rising amplitude of inflation rhetoric.

Consider the fact that for every new and additional EV car, truck, delivery van, 18-wheeler, motorcycle, or scooter that hits the streets, the need for electricity to charge and recharge it will skyrocket for many years to come. And this is just the transportation subsector. Smart homes, smart cities, and over three billion devices being connected by the Internet of Things (IoT) will also cause demand for electricity to surge.

Therefore, it stands to reason those utilities that dominate the electric grids will benefit immensely in both revenue and profit growth while generating attractive and growing dividend payments. Renewable energy means recurring revenue without the cost and fluctuating prices of fossil fuel inputs. Once solar, wind, hydro, thermal, and biomass infrastructure is built and operating, it becomes a cash flow machine.

A one-year chart of the Dow Jones Utility Average Index (below) shows a sector that has recently pulled back off its recent highs, along with many sectors of the market, where an attractive entry point has presented itself. The top two utilities ETFs are the Utilities Select Sector SPDR Fund (XLU) that sports a current yield of 3% and the Vanguard Utilities ETF (VPU) that pays a current dividend yield of 3.07%.

Dow Jones Utility Average Index Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Utilities that were once stodgy coal, oil, and natural gas-burning companies with low single digit growth rates are now tomorrow’s power companies. Though many are still regulated, they will be generating wider profit margins as renewable assets become paid for and represent a bigger percentage of revenue.

Natural gas will still play a major role in power generation that coincides with the push for renewables. Natty gas is clean, cheap, and incredibly abundant within the U.S., making the long-term transition to renewables – alongside the high utilization rate of natural gas – a harmonious path to meet long-term goals without major disruptions like what occurred in Texas this past winter. That ugly situation showed exactly what can and will go wrong if energy policy is not undertaken with a balanced approach.

To that end, here are a handful of non-MLP gas pipeline stocks that pay 1099 dividends with yields of 5%-7%: Kinder Morgan Inc. (KMI), ONEOK Inc. (OKE), and Williams Companies (IWMB). There are also pipeline ETFs utilizing some leverage that pay 8% to 9% in 1099 dividends. They are Alerian MLP ETF (AMLP), Virtus InfraCap MLP ETF (AMZA), and Global X MLP ETF (MLPA).

Navellier & Associates does not own Kinder Morgan Inc. (KMI), ONEOK Inc. (OKE), and Williams Companies (IWMB) in managed accounts.  Bryan Perry does not own Kinder Morgan Inc. (KMI), ONEOK Inc. (OKE), and Williams Companies (IWMB) personally.

All content above represents the opinion of Bryan Perry of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

A Look Ahead by Louis Navellier
Chances for Yellen’s “World Corporate Tax” Diminish

Income Mail by Bryan Perry
The Search for Green Energy-Related Income

Growth Mail by Gary Alexander
Some D.C. Economists are in Denial

Global Mail by Ivan Martchev
Sun Tzu Strikes Again, Blockchain-Style

Sector Spotlight by Jason Bodner
He Profits Most Who Learns How to Wisely Wait

View Full Archive
Read Past Issues Here

About The Author

Bryan Perry

Bryan Perry

Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.

Bryan’s financial services career spanning the past three decades includes over 20 years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry

Important Disclosures:

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at or by requesting a copy by emailing All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.