While electric vehicles eventually will change the footprint for internal combustion engine automobiles here and across the world, the reality is that we will need a ton of electricity generation to meet what will become a huge demand. Goldman Sachs notes that while currently, battery electric vehicles and plug-in hybrid electric vehicles make up only 1% of the total U.S. vehicles on the road, as increased penetration occurs, this should drive an uptick to the firm’s power demand forecast and outlook.
More conservative investors looking to capitalize on what is clearly a burgeoning long-term trend with massive upside may want to consider ancillary ways to play the electric vehicle (EV) industry, and power generation may be just the ticket as it comes with solid and dependable dividends. Goldman Sachs has taken a long look into the future and noted this in a recent research report:
The GS equity research team focused on the US automotive sector expects EVs to comprise 13% of the automotive fleet by 2030 and 32% by 2040 — we complete and incorporate an updated EV impact on US power demand, an impact which adds an incremental 2.4% to our 2030 power demand forecast and 5.7% to our 2040 outlook. We now expect 1.04% /0.73% average power demand growth rate for 2020-2030/ 2030-2040 including EVs – an uplift compared to our 0.61% ex-EV power demand growth forecast for 2020-2040.
The analysts are positive on long-term power growth for regular providers, especially after 2025, and also are positive on clean energy providers. It makes sense that you don’t want to be burning coal to generate electricity for cars that run on it.
Five Buy-rated stocks were highlighted and all make sense for investors with an eye toward the future, but perhaps a more conservative investment profile. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This top utility continues to raise its dividend on a steady basis, and it is one of two conventional providers featured here. Edison International (NYSE: EIX) generates and distributes electric power. As of March 3, 2021, it delivered electricity to 15 million residential, commercial, industrial, public authorities, agricultural and other customers across southern, central and coastal California.
Edison International also provides energy solutions to commercial and industrial users. Its transmission facilities consist of lines ranging from 55 kV to 500 kV and substations, and the distribution system consists of approximately 39,000 circuit-miles of overhead lines, approximately 31,000 circuit-miles of underground lines and 800 substations.
Investors receive a 4.64% dividend. Goldman Sachs has a $75 price target on the shares, and the consensus target is $71.50. Edison International stock closed on Tuesday at $57.15, which was up almost 3% on the day.