The Biggest Nuclear and Hydro Power Generators in Europe and Russia

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The STOXX® Europe 600 Utilities index is down over 3% YTD (in terms of price in Euros) and is off about 22% in the past 52 weeks. In the past five years the index is down about 50%.  Comprising of 27 of the largest utilities in Europe, the performance of the index in the 5-year period shows how much the traditionally safe sector has plunged in line with the equity markets of Europe. Despite the erosion of investors’ interest in European utility stocks, long-term investors looking for decent dividends and stable growth can consider adding some of them at current levels.

The following chart shows the Biggest Nuclear and Hydro Power Generators in Europe and Russia:

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Source: Fortum, Investor/Analyst Material, May 2012

Some of the above utilities that trade on the US markets are listed below with their current dividend yields:

1.Company:Electricite de France SA (ECIFY)
Current Price: $4.18
Current Dividend Yield: 7.19%
Country: France

2.Company:E.ON AG (EONGY)
Current Price: $20.76
Current Dividend Yield: 6.29%
Country: Germany

3.Company: Enel (ENLAY)
Current Price: $3.10
Current Dividend Yield: 16.75%
Country: Italy

4.Company: GDF Suez (GDFZY)
Current Price: $22.42
Current Dividend Yield: 9.14%
Country: France

5.Company: RWE AG (RWEOY)
Current Price: $42.16
Current Dividend Yield: 6.25%
Country: Germany

6.Company: Iberdrola SA (IBDRY)
Current Price: $18.17
Current Dividend Yield: N/A
Country: Spain

7.Company: Fortum (FOJCY)
Current Price: $4.17
Current Dividend Yield: 6.31%
Country: Finland

8.Company: Verbund AG (OEZVY)
Current Price: $5.36
Current Dividend Yield: 2.69%
Country: Austria

9.Company: EDP Energias de Portugal SA (EDPFY)
Current Price: $28.62
Current Dividend Yield: 8.46%
Country: Portugal

10.Company: Gas Natural (GASNY)
Current Price: $2.90
Current Dividend Yield: 6.32%
Country: Spain

11.Company: Norsk Hydro AS (NHYDY)
Current Price: $4.54
Current Dividend Yield: 2.96%
Country: Norway

Note: All prices and dividends are as of May 4, 2012

Disclosure: Long EONGY, FOJCY, RWEOY

Download: Barclays Equity Gilt Study 2011

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Barclays publishes the Equity Gilt Study each year. The 56th edition was published last year. This report provides useful insights on the performance of US and UK equities, bonds and other assets.  In addition, the report contains data on emerging markets, investment strategies and other related information.

The following are few of the interesting charts related to US stocks found in the Barclays Equity Gilt Study of 2011:

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a. Real Investment Returns of Asset types by Decades

b. Comparison of Returns with and without Reinvestment of Income

 

c. US Real Return on Equities with Gross Income Re-invested

Download: Barclays Equity Gilt Study 2011 (full version in pdf)

The World’s Largest Power Markets

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The following chart shows the world’s largest markets for electricity:

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The U.S. and China consume more than four times the power consumed by the next largest market of Japan. With has a population of about 1.1 billion India’s power generation capacity is much lower than that of China. Though Russia has a small population it produces more electricity than India.

Source: Fortum, Investor/Analyst Material, March 2012

Disclosure: Long Fortum

Comparing Political Superpower and Lifestyle Superpower

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The U.S. unemployment rate stood at 8.2% in April. Some 12.5 million Americans are unemployed according to official figures and about 29.5% of the unemployed people were jobless for a year or more. For the majority of these unemployed benefits from the state are highly limited when compared to other countries especially the developed countries in Europe.

The U.S. can be considered as a “Political Superpower” and Europe can be considered as the “Lifestyle Superpower” according to one report. In some ways this is true. The U.S. consistently ranks lower than other countries in standard of living comparison rankings. The following graphic shows one reason for why the U.S. remains the undisputed political and military superpower but Europe remains the lifestyle superpower.

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Source: Golden Growth Restoring the lustre of the European Economic Model, The World Bank

In order to retain the status of a superpower, U.S. spends a huge amount of resources on defense. In fact, the U.S. expenditure on defense equals the total defense spending of the next 15 countries. In contrast, to maintain it status as the lifestyle superpower, Europe spends most on social protection than the rest of the world combined.

The interesting factor that differentiates Europe and the U.S. is that Americans tend to buy more goods and services when wealth increases while Europeans spend more on leisure. From McMansions to multiple cars on the driveway to millions of retail stores (some open 24 hours) spread across the U.S. selling cheap goods attest to this fact. In the 1950s Europeans worked almost a month more per year than Americans. Today most Americans hardly take a vacation compared to many weeks of vacation taken per year by Europeans. In addition to balancing work and life, Europeans also retire early with guaranteed pensions while in the U.S. live to work has become the new mantra instead of the other way around. An article late last year noted that for many middle-class retirees 80 is the new 65.