Iberdrola hits record highs: the safe haven now yielding more than a salary
Iberdrola is trading at all-time highs and is close to becoming the world's largest utility by market cap. Long-time shareholders aren't selling: dividends alone are already paying off.
English · Original discussion in Spanish · Published
Iberdrola smashes records and veteran shareholders earn more than an average salary
Is it still worth holding Iberdrola when the stock is trading at all-time highs? The question is doing the rounds among a shareholder base that has been in the hands of small retail investors for decades and is now enjoying a golden moment: the Spanish utility is racking up records, approaching 22 euros and just one step away from becoming the world's largest power company by market capitalization. Some have held the shares since childhood and now admit that dividends alone bring in more than the average Spaniard earns working.
The most striking case is that of an investor who started buying alongside his parents, kept going out of habit once he entered the job market, and now holds thousands of shares. His conclusion is uncomfortable: "They got lucky, they could have chosen Telefónica." The warning is not trivial. The same monthly discipline that has made Iberdrola a textbook defensive stock would have produced a very different result at other IBEX 35 companies.
Why Iberdrola is trading at record highs
The dominant thesis is simple: regulated business, presence in several countries and a dividend that never fails. Compared with purely Spanish utilities, it is pointed out that geographic diversification reduces exposure to the political swings of each legislature. That mix of predictable income and shareholder payouts is what many call the best stock on the Spanish index.
The growth argument has a name: the electrification of the economy and data centers. The company is investing heavily in grids, and those who trinc it believe that rollout is guaranteed a return. Last week it emerged that the company was within a whisker of leading the global power sector by market cap, a milestone that reinforces the narrative.
Not everyone buys the story. A skeptical camp warns that the data center tale is the new "let's electrify the world," a narrative to justify higher multiples rather than to sustain the dividend. The regulated business, they remind us, keeps only what the politician of the day allows, and that is the real risk, not Virginia's GDP. On top of that comes a physical limit: grid connection queues are measured in years.
The shareholder who won't sell no matter what
Discipline rules. Some hold a position with an average price of 4.35 euros and say they won't budge until 30. Others take the dividend in shares and leave the position untouched. The recurring savings strategy — the one that started with buying every month without much idea about investing — is what has quietly built fortunes while the noise of the charts distracted everyone else.
The counterpoint comes from lived experience. An investor with financial training admits that his parents, with no training and a portfolio concentrated in Iberdrola, BBVA and a few other IBEX 35 banks, are accumulating larger capital gains than he is. The anecdote dismantles blind faith in sophisticated analysis: sometimes good old buy and hold wins the game.
The shadow of Telefónica looms over every decision. The same strategy being celebrated today could have been a drag if the choice had been different. That's why some recommend diversifying into a global index like the MSCI ACWI instead of concentrating everything in a single utility, however well positioned it may be.
What could go wrong with the utility at record highs
Political risk weighs the most. The regulated business depends on what the government of the day decides, and each legislature brings its own temptation to skim from bills. Add macro volatility: French debt, oil and market swings could push away those 22 euros that seemed within reach.
The million-dollar question remains unanswered: buy, hold or sell? Most positions lean toward holding and adding on dips. The company, they say, is well positioned for all the energy demand to come, and not only in Spain. The dividend, meanwhile, keeps arriving.
With the stock at record highs and veteran shareholders earning more than an average salary, the temptation to sell is understandable. But nobody wants to get off a train that hasn't derailed in decades. The discipline of recurring saving — the one that started without really knowing what a dividend was — keeps winning by inertia.
Is it still worth holding Iberdrola when the stock is trading at all-time highs? The question is doing the rounds among a shareholder base that has been in the hands of small retail investors for decades and is now enjoying a golden moment: the Spanish utility is racking up records, approaching 22 euros and just one step away from becoming the world's largest power company by market capitalization. Some have held the shares since childhood and now admit that dividends alone bring in more than the average Spaniard earns working.
The most striking case is that of an investor who started buying alongside his parents, kept going out of habit once he entered the job market, and now holds thousands of shares. His conclusion is uncomfortable: "They got lucky, they could have chosen Telefónica." The warning is not trivial. The same monthly discipline that has made Iberdrola a textbook defensive stock would have produced a very different result at other IBEX 35 companies.
Why Iberdrola is trading at record highs
The dominant thesis is simple: regulated business, presence in several countries and a dividend that never fails. Compared with purely Spanish utilities, it is pointed out that geographic diversification reduces exposure to the political swings of each legislature. That mix of predictable income and shareholder payouts is what many call the best stock on the Spanish index.
The growth argument has a name: the electrification of the economy and data centers. The company is investing heavily in grids, and those who trinc it believe that rollout is guaranteed a return. Last week it emerged that the company was within a whisker of leading the global power sector by market cap, a milestone that reinforces the narrative.
Not everyone buys the story. A skeptical camp warns that the data center tale is the new "let's electrify the world," a narrative to justify higher multiples rather than to sustain the dividend. The regulated business, they remind us, keeps only what the politician of the day allows, and that is the real risk, not Virginia's GDP. On top of that comes a physical limit: grid connection queues are measured in years.
The shareholder who won't sell no matter what
Discipline rules. Some hold a position with an average price of 4.35 euros and say they won't budge until 30. Others take the dividend in shares and leave the position untouched. The recurring savings strategy — the one that started with buying every month without much idea about investing — is what has quietly built fortunes while the noise of the charts distracted everyone else.
The counterpoint comes from lived experience. An investor with financial training admits that his parents, with no training and a portfolio concentrated in Iberdrola, BBVA and a few other IBEX 35 banks, are accumulating larger capital gains than he is. The anecdote dismantles blind faith in sophisticated analysis: sometimes good old buy and hold wins the game.
The shadow of Telefónica looms over every decision. The same strategy being celebrated today could have been a drag if the choice had been different. That's why some recommend diversifying into a global index like the MSCI ACWI instead of concentrating everything in a single utility, however well positioned it may be.
What could go wrong with the utility at record highs
Political risk weighs the most. The regulated business depends on what the government of the day decides, and each legislature brings its own temptation to skim from bills. Add macro volatility: French debt, oil and market swings could push away those 22 euros that seemed within reach.
The million-dollar question remains unanswered: buy, hold or sell? Most positions lean toward holding and adding on dips. The company, they say, is well positioned for all the energy demand to come, and not only in Spain. The dividend, meanwhile, keeps arriving.
With the stock at record highs and veteran shareholders earning more than an average salary, the temptation to sell is understandable. But nobody wants to get off a train that hasn't derailed in decades. The discipline of recurring saving — the one that started without really knowing what a dividend was — keeps winning by inertia.
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (124 replies).
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