Terna: Investing In Dividend Generating Infrastructure

2025-01-25 08:00:00 ET

Summary

• Terna S.p.A. is a key player in Italy's power grid, focusing on the transmission and dispatching of electricity, with strong financial performance.
• The company is committed to dividend growth, with a 5.5% CAGR in dividends since 2004, and plans to continue this trend with at least 4% annual growth.
• Terna's strategic investments, including the acquisition of the high-voltage transmission grid around Rome, position it well for future growth and stability.

Terna Spa ( OTCPK:TERRF ; OTCPK:TEZNY ) is one of my smaller holdings, making up around 2% of my portfolio. So, compared to stocks where I am heavily overweight, it might not significantly swing the needle of my overall performance (if the stock gains 5%, it is a 0.1% contribution to the overall performance). Nonetheless, I keep holding it because it fits with the main criteria I am using to select my stocks. It is a utility and it plays a pivotal and monopolistic role in Italy's power grid. It runs a business that everyone has to rely on. Although regulated, it earns a decent return on its investments (; its balance sheet is healthy and the company can generate steady cash flows that are returned via growing dividends. As I have refined my understanding of the investments I want to make, I find myself more and more drawn to infrastructure plays because we live in a world where these assets play a big role and constitute true gateways everyone else has to go through....

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