"Security energies" – how to invest: RWE, Iberdrola, and RE Royalties as stable sources of returns

RWE is driving forward the expansion of green capacity

The major energy suppliers form the backbone of this development. RWE has largely completed its transformation from a coal-based utility to a leading player in the field of renewable energy. The company now operates a portfolio of 38.7 GW of green generation capacity, which is being supplemented by a pipeline of a further 11.4 GW under construction. The performance of this portfolio was evident in the first three quarters of 2025, when RWE achieved adjusted EBITDA of EUR 3.5 billion. Onshore wind and solar in particular recorded strong growth to EUR 1.242 billion. To meet the rising demand for electricity from AI, RWE is also positioning itself as a direct partner to technology companies, as evidenced by the lucrative sale of a data center project in the UK for EUR 225 million. The Group plans to make net investments of EUR 35 billion between 2025 and 2030, with a focus on expanding offshore wind power in the North Sea. This strategy is flanked by the early phase-out of coal by 2030, which offers investors the prospect of growing earnings per share of EUR 4 in 2030 and rising dividends.

Iberdrola delivers stability through smart grids

Spanish energy heavyweight Iberdrola complements this approach with a clear focus on expanding smart power grids. With a valuation of over EUR 125 billion, the group has established itself as the world's second-largest utility company. The foundation of its business model lies in its regulated network business, which contributes around 30% of net profit and around 40% of EBITDA. Pure energy production secures the remaining revenues, with over 85% of production fixed through long-term contracts, protecting the company from price fluctuations on the spot market. In an environment of rising interest rates and geopolitical instability, these government-guaranteed investments, together with long-term power purchase agreements, provide a high degree of financial predictability for investors.

Under the leadership of Ignacio Galán, Iberdrola has increased its investment budget for the period up to 2028 to EUR 58 billion. Of this, EUR 37 billion will go directly toward the digitalization and expansion of the electricity grids in the US and the UK. The goal is to increase the regulated asset base to EUR 70 billion and guarantee investors a reliable dividend – the dividend yield is currently over 4%.

RE Royalties as an energy transition financier and dividend payer

Those who want to fully exploit the strengths of renewable energy projects far away from the major utilities are turning to the RE Royalties model. The Canadian company acts as a specialist financier of the energy transition and has successfully transferred the royalty model familiar from the mining industry to green technologies. Instead of operating its own plants or bearing the operational risks of maintenance and decommissioning, RE Royalties provides capital to project developers. In return, the company secures a percentage share of the gross revenues of the respective energy projects. The portfolio now includes licenses for over 100 projects worldwide, ranging from large-scale solar plants and onshore wind farms to battery storage facilities. This model allows investors to participate in the cash flows of a large number of plants without direct operational risks, while largely avoiding dilution of existing shareholders.

RE Royalties is currently driving its expansion through targeted new investments. A core project is the partnership with Solaris Energy, in which RE Royalties is investing up to USD 9 million to acquire interests in portfolios of distributed solar installations in the US. These projects serve commercial customers in states such as California and Maine and offer stable returns over a period of 25 years. For yield-oriented investors, the dividend policy is the decisive factor. The company has paid dividends continuously for over seven years and, with a current quarterly dividend of CAD 0.01 and a share price of around CAD 0.40, offers an attractive forward yield of around 10%. In order to increase financial flexibility for investments in new projects, management plans to pay an annual dividend instead of a quarterly dividend in the future. The green bonds issued by RE Royalties to finance projects could also be of interest. These offer coupons in the high single-digit range.