I found myself exploring the Midwest over the holiday weekend. What started as an impromptu trip to visit an old friend in Boulder, CO, turned into a solo exploration of four states I’ve never visited: Oklahoma, Kansas, Nebraska, and Iowa.

On my way to see the largest belt buckle, ball of twine, covered swing, time capsule, and shuttlecock, I stopped for some delicious gluten-free chicken and waffles. (I will post a photo dump on Instagram sometime this week.)

It was a 2,037 miles adventure over four days with many fun roadside attractions. In between, there were hours of scenic cornfields and wind turbines.

I forgot to get a picture of the numerous tractor-trailers I passed hauling pieces of new turbines. It really put into perspective the enormity of the turbines… especially when driving a Mazda Miata.

What I didn’t realize until digging around on my computer late one night, was the connection between those rows and rows of turbines and the future of technology. Open land, lower construction costs, and cheap renewable wind energy have made Iowa a mecca for data centers.  

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Put the Midwest on Your Radar

There are 104 data centers operating or under construction in Iowa. I unknowingly drove by several of them, including a U-turn made just yards from Alphabet’s (GOOG) Council Bluffs, Iowa, data center campus. Meta Platforms (META), Microsoft (MSFT), and Apple (APPL) all have sites in the Hawkeye State as well.

When I laid out some of my favorite areas for data center utility investments last month, Iowa wasn’t on my radar. But I also didn’t realize that the state has the eighth lowest average electricity prices in the US. Then there’s the added benefit that the majority of it is from renewable sources.

Source: energy.gov

That chart is from 2023. We can assume the wind percentage is even higher now as the investment in turbines there has continued.

I have a front row seat to the Memphis vs. xAI dissention. The data center is attempting to use three times the amount of power it originally sought approval for. To offset its demand on the grid, it now uses unpermitted natural gas turbines that worsen the city’s already terrible air quality. 

The availability of cheap renewable energy in the Midwest solves that problem. And it arms companies like Google, Meta, and Microsoft with bragging rights about being eco friendly. Google’s Council Bluff’s data center campus is powered by 95% carbon-free electricity.

Iowa is leading the pack, but it’s not alone. There are at least 18 data centers in Kansas and around 36 in Nebraska. And they are being partially powered by wind energy. Over 45% of the Kansas grid mix comes from wind, and over 32% in Nebraska.

I did search for utility plays in all three states, but Iowa looks like the leader. And that’s really where I want exposure.

My Rules Are More Like Guidelines

The two main electricity providers for Iowa are MidAmerican Energy Company and Alliant Energy Corp. (LNT). Only the latter is publicly traded. Berkshire Hathaway acquired the last remaining stake in MidAmerican Energy last year.

I am more interested in Alliant as Google’s new Cedar Rapids facility will be located at its Big Cedar Industrial Center. We know that site location close to power generation is common and integral for the future of the technology. Both the xAI Colossus facility and Ford’s Blue Oval City are strategically placed across from TVA (Tennessee Valley Authority) power stations.

The more I dug into Alliant, the more I wanted it in my personal portfolio. It’s not just data centers that rely on cheap renewable energy; many other well-known companies are in the same boat. Take a look at this slide from Alliant’s latest earnings.

Source: Alliant Energy

These giants form a strong bedrock of demand for Alliant. Then add data centers that are ready to ramp up growth. The company projects a 30% increase in demand by 2030.

What’s even better is Alliant has raised its dividend for the past 21 years and has a healthy payout ratio of 58.7. But there’s one downside: The current yield is just 3.12%.

But I plan to add some Alliant shares to my portfolio anyway.

Yep, you heard me right. I’m going to buy a stock with a yield under 3.5%. That’s because I don’t view Alliant as either a Bedrock Income or Current Yield position. I want it in my portfolio to speculate on the growing electricity demand we will see over the next decade. Plus, I don’t have any renewable energy exposure. The 3.1% yield is a nice bonus to collect while I wait for this trend to play out.

At the end of the day, dividends are a tool in your investing toolbox. My two-prong strategy forms the base of my portfolio. It creates the security of building future wealth and generating above-average income. But those aren’t the only two uses.

I will always look for a dividend opportunity no matter what exposure I’m trying to get in my portfolio. And I’ll always look for an opportunity over 3.5%. Rules prevent my emotions from taking over my portfolio… but there are times when rules become guidelines if you have the conviction.

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For more income, now and in the future,

Kelly Green

• Alliant Energy LNT
• data centers
• wind energy