AES Corp. (NYSE:AES) (2.3% of net assets as of December 31, 2018) (AES – $14.46 – NYSE) is a global power company. Since late 2011, AES has been narrowing its strategic focus, which included the sale of over $3 billion in non-core assets, buying back stock and debt, and paying a dividend. Roughly 90% of earnings are now derived from only eight countries (compared to 30 several years ago) under four reporting segments, including U.S. (U.S., Puerto Rico, and El Salvador); South America (Chile, Colombia, Argentina, and Brazil); MCAC (Mexico, Panama, and Dominican Republic); and Eurasia. The acquisition of sPower enhanced the company's renewable platform by adding 1.3 GWs of solar and wind and a 10.0 GW renewable development pipeline. The company is adding 8.3 GWs of new generation (inlcuding 1,320 MWs of coal in India), investing in battery-based energy storage and targeting adjusted earnings, cash flow and dividend growth of 8%-10% through 2020. AES offers a 4.0% current return on a $0.52 per share annual dividend, which management expects to grow 10% annually. On January 18, 2018, AES announced the addition of activist investor Jeffrey Ubben of ValueAct Capital Management to the Board of Directors. We regard AES as one of the better securities to allow the Fund to gain exposure to utility markets both inside and outside of the U.S.
From Mario Gabelli (Trades, Portfolio)'s Gabelli Utilities Fund fourth-quarter 2018 commentary.
