Red Electrica is 9B€ capitalization company that manages the electric grid in Spain
- one of the longest dividend aristocrats in Europe (17 years)
- with a current 4.9% dividend
- a very shareholder friendly policy (+7% growth expected in the next 3 years).
Its main operations are in Spain, but it also expanding in South America.
Many growth projects are expected to start in coming years: from small acquisitions in Spain to new projects in Chile.
Red Electrica has a quite conservative debt level (3.2x EBITDA), allowing to keep growing in its strategic project and sustain its dividend policy.
REE has the financial support from the market, considering that it just closed a 10 Year bond for 1.065%. Its average cost of Debt is 2.83% on 4.7B€. EBITDA can cover 10 times interests.
Since 2000, Red Electrica is increasing its dividends from 0.09 to 0.91€ and share price moved from 9€ to 17€ (with 1×4 split).
Dividend is a clear focus for REE and it will keep growing at around 7%, considering only 50% of Free Cash Flow is used for Dividend and Operating Cash Flow is growing faster than dividend increases.
Last 2 months, Red Electrica price showed some weakness, and coming Catalan referendum could provide a very good entry point. Around 16€ (for Spanish ticker: REE.MC), the dividend will be close to 5.7% and growing. At this price, I would not miss this income opportunity, adding something safe and highly rewarding.
In USA, you can find Red Electrica under the ticker: RDEIY.