💸 The AI Power Boom
Today is Dividend Day.
The series where I teach you 5 things about dividend investing in less than 5 minutes.
1️⃣ Regulated Cash Flows
Utility companies can be very attractive dividend payers.
They provide essential services like electricity, natural gas, and water to homes, businesses, and now, massive AI data centers.
They also let you invest in critical infrastructure while earning reliable, regulated dividend income.
To qualify as a top-tier utility dividend stock, a company must have:
Regulated rate base (guaranteed returns approved by state regulators)
Stable demand (everyone needs power, recession or not)
Decades of consecutive dividend increases
This visual clearly breaks down the entire process:
2️⃣ Boring Stability
Utilities tend to be very stable.
No matter what’s happening in the economy or the market, their returns are almost fixed.
This makes them defensive, but it also makes them pretty boring.
But as AI infrastructure scales rapidly, power demand is surging.
U.S. electricity consumption is now expected to grow around 3% annually, which is almost double the historical pace.
That’s brining some excitement to this often boring sector.
3️⃣ An Investing Quote
When you own a utility company, you own the power lines, water pipes, and infrastructure that keep businesses and households running.
Every month, the customers pay their bills, and you collect steady income.
In these types of businesses, it’s very easy to understand what your money is doing.
I think Warren Buffett would definitely be interested, as he says:
“Risk comes from not knowing what you’re doing’
— Warren Buffett
4️⃣ The AI Power Boom
One of the biggest trends in 2026 is AI-driven electricity demand and utilities are the direct beneficiaries.
According to the International Energy Agency’s Energy and AI report:
Data center electricity demand is growing ~15% annually nearly 4× faster than overall power demand
Global consumption from data centers is expected to double by 2030
You can access the full report here.
5️⃣ Example of a Dividend Stock
Let’s look at NextEra Energy (NEE).
Its a Dividend Aristocrat (they have raised dividends for over 25 consecutive years)
Their business is split into two parts:
FPL (Florida Power & Light): This is the regulated utility side. It provides the stable cash flow that supports the dividends
NextEra Energy Resources (NEER): This is their competitive clean energy side. It powers the data centers and makes them the world leader in renewables
Key numbers from Fiscal.ai:
Profit Margin: 23.5%
Forward PE: 23.3x
Dividend Yield: 2.4%
Payout Ratio: 58.8%
Total return (CAGR since 2001): 14.7%
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
Disclaimer
As a reader of Compounding Dividends, you agree with our disclaimer. You can read the full disclaimer here.
The power infrastructure story is one of the most important and underreported dimensions of AI's long term trajectory. Data center energy demand is reshaping grid investment decisions in ways that will have consequences well beyond the tech sector. The governance angle that often gets missed is who is accountable when AI growth targets conflict with national energy transition goals. That is a regulatory gap that is still largely unaddressed.