Industrial gas giant Linde (LIN 0.38%) has established itself as a leader that understands the technology, applications, and infrastructure necessary for hydrogen energy. In this Fool Live segment from "The High Energy Show," recorded on Feb. 15, Motley Fool contributor Jason Hall tells investors what they need to know about this innovative company.
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Jason Hall: Yeah, I'm a big fan of Linde. This is one of those industrial gas giants. Merged with Praxair in late 2018, I believe, so it created just one of just a real dominant company. Linde already does a multi-billion-dollar hydrogen business today. This is a company that understands the technology, that understands the applications, that understands the infrastructure stuff we're talking about. All of those things really, really matter. This is a bit of a leader in blue hydrogen in terms of bringing it to scale. Again, this is taking natural gas, steam reformer, and then carbon capture to keep the carbon emissions from getting into the atmosphere. They are a real leader, they understand the economics, so I think that really, really matters.
The other thing is that this is a company that has consistently generated wonderful, wonderful returns. It has scale and the way that it operates, I think, is really compelling. It actually answers a couple of questions folks were asking about, when is the infrastructure going to go out thinking about for transportation, and a lot of ways companies like Linde, you're built to be winners there because the way Linde operates is Linde has a customer, an industrial customer manufacturer, healthcare organization, whatever, they signed a long-term contract, and they have a manufacturing facility that's adjacent to their customer that's producing this gas, and then there's the pipes that Travis was talking about. That customer takes 80 percent, 90 percent of the capacity for their manufacturing.
Then what do they do? They go to every other potential industrial user within driving distance of that facility, and they sell the excess capacity at higher margins. It is a perfectly structured business to take green hydrogen and leverage that model, and push it out for distribution externally. Where all of a sudden now, if you're Coca-Cola, maybe you work with Linde as your fuel supplier. I think those are really, really powerful things that are built-in. Nick was talking about it earlier, this is a company that knows how to make money. I think it's paid a dividend and grown 29 years in a row, it's a dividend aristocrat. I think it's very, very compelling and you don't have to take on the risk of say, a Plug Power that's doing a million things, they look really exciting, but all the company has ever really meaningfully done in its existence is tell great stories, raise capital.
Travis Hoium: Raise capital.
Jason Hall: Then incinerate that capital and not generate a return on that capital.
