Wagering on smart city stocks could be a fascinating long-term investing move.
Over the past few years, local organizations have had to undergo rapid digital transformation following the step-changes brought about by the pandemic.
This also resulted in an increased push towards improved infrastructure at a local level. Smart cities are now rising to critical importance as they can facilitate better conditions, such as remote working and greater lifestyle flexibility.
Smart cities have created a way to bring technology to the forefront of urban living. These cities are doing their part to make cities more livable, workable, and sustainable with improved traffic management, more efficient waste removal, and better resource management.
Through more effective information and communication technologies, smart cities are revolutionizing how urban centers function and making people’s lives much easier. That said, let’s look at three smart city stocks to invest in to ride what is likely to be a multi-billion dollar industry.
iShares Global Infrastructure ETF (IGF)
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iShares Global Infrastructure ETF (NASDAQ:IGF) is a leading exchange-traded fund that primarily invests in defensive sectors such as utilities and transportation.
These sectors comprise almost 80% of its holdings, while the top five only account for roughly 23% of its total weightage. Therefore, the ETF boasts a highly diversified portfolio with an expense ratio of just 0.4%.
IGF has strong exposure to the utility sector, giving it an overall defensive slant. Utilities include core services, electricity, water, internet, and other elements critical to any city’s infrastructure.
Additionally, IGF has exposure to multiple geographical regions, diversifying its risks further. Some of its top holdings include Dominion Energy (NYSE:D), TC Energy (NYSE:TRP), and Enbridge (NYSE:ENB), along with other 70+ stocks that collectively offer a dividend yield of over 2.5%.
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Perhaps the most popular name in the 5G space is the once-famed smartphone maker Nokia (NYSE:NOK).
The firm has evolved into a telecommunications giant with a major stake in the 5G race. It has successfully secured over 160 commercial 5G orders and remains the most sought-after firm in the 5G space.
Besides, NOK trades at just under 0.96 times sales and a modest dividend yield of approximately 0.9%. Therefore, it remains an excellent choice for long-term investors looking to bet on smart cities and the future of connectivity.
Siemens (OTCMKTS:SIEGY) is one of the top large-scale industrial manufacturers, with products spanning multiple sectors.
In the past couple of years, Siemens has forayed into the smart city space, partnering with the Government of Berlin to develop The Siemensstadt “Siemens City.”
The firm has invested $600 million in Berlin, with the project covering 70 hectares and could potentially “transform a large industrial area into a modern, urban district of the future for a diverse range of purposes.”
Siemens’ offerings in the smart city space range from its novel MindSphere Application Centers to effective, resilient resource management and infrastructure financing. Also, the firm has been doubling down on AI and is exploring how the technology could impact automation, industrial design, and the Internet of Things (IoT).
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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