When you think of "retirement stocks," you probably think of very large, very safe dividend-paying companies, like utilities. These safer plays offer a winning combination of nest egg protection and a reliable stream of steady income that can help retirees live in style.
But what if you're not yet in retirement, so you're not quite ready to allocate a large chunk of your portfolio to slow-growing dividend stocks, but want to make that transition when the time comes? Well, there's a surprising option you might want to consider: Oklo (OKLO 4.97%), the nuclear stock that could power your retirement for decades. Here's how.
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A start-up mentality
Oklo is one of a growing group of companies developing small modular nuclear reactors (SMRs) as sources of electricity. As you probably guessed, these are essentially smaller versions of the nuclear reactors found in existing U.S. nuclear power plants. Although their electrical output in would be lower than that of a traditional nuclear plant, their footprints would be much smaller than the one square mile a traditional nuclear plant requires. That allows for more flexibility in siting them where demand for power is greatest. Oklo has dubbed its SMR facility design the "Aurora Powerhouse," and is currently in the process of building its first one in Idaho.
As a young company, Oklo is still in the "pre-commercial" phase of its development. It doesn't expect to begin making any money from its Aurora Powerhouses until late 2027 at the earliest, and it has plenty of regulatory and operational hurdles to overcome before then. That's why Oklo stock is considered a very risky and speculative investment right now.
So how could it be a good choice for a retirement portfolio?
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A stalwart business model
Unlike many other nuclear start-ups, however, Oklo isn't planning to make money by building a reactor and selling it to a customer, which would then operate it and either profit from selling the electricity it generates or save money by generating its own electricity for its own use. Instead, Oklo plans to build and operate the reactors it's designed, selling the generated power to customers instead of selling the reactor. In that respect, its ultimate business model is more similar to an electric utility than to a large equipment manufacturer.
NYSE: OKLO
Key Data Points
In other words, if Oklo's strategy goes as planned -- and remember, that's a big "if" -- it'll be operating many Aurora Powerhouses or other similar facilities, with steady streams of recurring revenue and cash flow. That could eventually yield a regular dividend payment, like many electric utility stocks now pay.
Of course, there's a long and uncertain road between where Oklo is now and a potential dividend check, so if you're looking for an immediate source of retirement cash flow, Oklo's definitely not a good option. But if your retirement is 10 years away or more, Oklo offers the prospect of massive growth in the short term and reliable income over the long term. You just need to be prepared to stomach a lot of risk.
