Benefits of Passive Income
in Energy

The energy sector provides one of the most stable income streams in the economy, being a fundamental necessity that never disappears. Unlike cyclical or technology sectors, energy maintains a constant demand regardless of economic conditions.

Energy companies, especially utilities, are known for their consistent dividend distributions even in times of recession. This is due to business models based on long-term contracts, government regulations that protect profitability, and the essential nature of the services provided.

Investors seeking stability appreciate the energy sector for the predictability of cash flows. Companies like Enel, E.ON, or Engie have maintained or increased dividends for over 20 consecutive years, demonstrating the resilience of their business models. This consistency provides investors with the opportunity to plan long-term and rely on the generated revenues.

The energy sector provides a natural protection against inflation through price adjustment mechanisms and tangible assets. When inflation rises, energy companies can pass on costs to consumers, maintaining profit margins and dividend-paying capacity.

Anti-Inflation Protection Mechanism

• Inflation-indexed contracts:Many energy contracts include clauses for automatic price adjustments based on inflation rates, ensuring the maintenance of purchasing power of incomes.
• Active tangible assets:Wind parks, solar farms, and hydroelectric power plants are physical assets that appreciate over time, providing protection against currency depreciation.
• Correlated commodity prices:Energy prices follow inflation trends, creating a positive correlation that protects real yields.
• Negotiating power:Large energy companies have the power to negotiate better prices and pass on the costs of inflation to consumers.

Historical studies show that the energy sector has outperformed inflation in 8 out of the last 10 years, providing positive real returns even in periods of high inflation. This characteristic makes energy investments an essential component for any portfolio aiming to preserve purchasing power in the long term.