Weekly high-dividend stock selection: Iberdrola SA
Iberdrola, the world's largest energy supplier and the global leader in wind energy production, is currently experiencing a cautiously optimistic outlook. The Spanish-based company, headquartered in Bilbao, has been a reliable dividend payer to its shareholders for a long time, with dividends continuously increased since 2015.
The current P/E ratio of Iberdrola stands at 15, while the expected dividend yield is a substantial 4.95%. The average price target from analysts is €12.29, representing a 13.80% increase in the share price. This focus on growth is evident in Iberdrola's recent large €5 billion share sale, priced around €15.10 per share, aimed at funding expansion in the US and UK power networks.
The company's investment strategy is significant, with total annual gross investments projected to reach approximately €15 billion in the coming years. A strategic shift toward regulated assets is expected to triple by 2031, primarily outside Spain due to less favourable conditions at home.
Recent market performance shows a short-term weakness, with the stock price having dropped about 4.5% as of late July 2025. However, this drop is supported by falling volume, which technical analysis interprets as a potential buying opportunity. Forecasts suggest a moderate upward move (~5.8%) over the next three months, targeting a range of €18.76 to €20.96 per share by the end of this period.
Two important levels for the stock from a chart perspective are €10.50 and €9.50. It's worth noting that the stock price of Iberdrola has risen by 14% in the last six months.
Credit rating agencies view the recent capital increase positively, expecting improved leverage metrics consistent with Iberdrola’s BBB+ rating. However, challenges remain, including regulatory and cost headwinds in the US market and limited incentives in Spain that may constrain local growth.
Investors should consider these regulatory risks and market-specific challenges that influence regional growth prospects. Despite these challenges, Iberdrola's position as the world's largest power producer from wind energy offers a promising future for the company.
Iberdrola managed to slightly exceed analysts' expectations in the quarterly results at the end of July, thanks to currency effects. The company increased its revenue by €6 billion to €39.1 billion from 2020 to 2021. Approximately 8% of its revenue comes from Mexico, 15% from the USA, 17% from the UK, and 17% from Brazil.
In conclusion, Iberdrola's stock outlook appears cautiously optimistic, driven by substantial investment aimed at infrastructure growth in attractive markets, supported by a strong capital raise, with technical indicators suggesting potential near-term gains. However, investors should be mindful of regulatory risks and market-specific challenges that may impact regional growth prospects.
[1] Source: Iberdrola's 2025 Q2 Results Announcement [2] Source: Analyst Forecasts for Iberdrola's Stock [3] Source: Iberdrola's 2025 Investor Day Presentation [4] Source: Moody's Investors Service Rating Action for Iberdrola [5] Source: Reuters: Iberdrola Faces Challenges in Spain's Energy Market
Iberdrola's expected dividend yield of 4.95% demonstrates a substantial financial return for its shareholders. The company's current P/E ratio at 15 reflects a cautiously optimistic outlook in the financial sector.
