Avangrid (AGR) hasn’t raised its dividend since July 2018. Not surprisingly, its returns have since lagged the Dow Jones Utility Average, notes Roger Conrad, editor of the industry-leading advisor service, Conrad's Utility Investor.

Two major developments promise a favorable reversal of fortune. The first is Avangrid’s takeover bid for New Mexico/Texas-based electric utility PNM Resources (PNM).

The second is the likely lifting of regulatory hurdles delaying plans to construct and operate extensive offshore wind power facilities off the US Atlantic Coast, starting in New England.

The $4.3 billion Avangrid and its 81.63 percent-owner and parent Iberdrola SA (Spain: IBE) (OTC: IBDRY) are paying for PNM is a hefty premium.

Nonetheless, terms are still strongly accretive to their earnings, with increased scale offering cost savings and ability to accelerate PNM’s transition to renewable energy. And faster decarbonization will be a key selling point for New Mexico, likely the toughest hurdle to a Q4 close.

Buying PNM also diversifies Avangrid’s regulated US utility operations outside of the Northeast, reducing regulatory risk as well as seasonality of earnings.

And it gives the company a larger pool of regulated cash flows to balance the ongoing growth of its contract renewables business. The latest addition is a 306-megawatt capacity contracted wind facility in New Mexico set for startup late Q4.

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The company also won approval recently from the U.S. Army Corps of Engineers to build a $950 million power line to bring 1,200 MW of hydropower from Quebec to Maine.

But it’s been considerably less fortunate dealing with the Bureau of Ocean Energy Management, which continues to delay permits for the company’s Vineyard Project off the coast of Massachusetts.

Other permits are pending for a commercially secured project in Connecticut and soon will be in New York, where Avangrid has bid to build one gigawatt of capacity.

The bet is Biden's Bureau of Ocean Energy Management would be considerably more accommodating. And approval of any of these offshore wind projects is a potential game changer for company profits and dividend growth. Buy Avangrid up to $52.

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