Travis Miller: With all the talk about the resurgence in coal generation over the next few years, we actually think we're entering another period of hyper growth in the renewable energy space. Wind and solar we think can grow 8% over the next four years and as much as 15% by 2030. That's due only to the existing regulations at the state level that are required and require no further other regulations. What we like about this is that carbon dioxide emissions will also fall almost to levels that were in the Clean Power Plan.
An unusual pick that we like out of the utilities space is American Electric Power. This is an unusual name because it used to be the largest coal generator in the U.S., but now its investments are going into transmission and renewable energy. We expect it to invest billions of dollars over the next five years in transmission and renewable energy. The transmission investments will help transfer power from wind farms to load centers.
AEP trades at a 3.6% dividend yield right now and slightly below our fair value estimate. We think it can grow earnings 6.5% over the next few years, making this a very good total return package.