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Utility Stocks To Buy

AES is also one of the best dividend stocks. The company has increased its dividend for 10 consecutive years, from just 4 cents per share in 2012 to a projected 66 cents per share in 2023. And on top of that payout, shares have risen about 20% in the last 12 months, showing the growth potential of one of Wall Street's best utility stocks even amid a challenging market environment.

utility stocks to buy


It's important to understand that Brookfield is not a traditional utility provider like your local power company. Rather, it generates the electricity, but then sells the bulk of the power it generates under long-term agreements with third-party utilities or passes the electricity on directly to large corporate buyers. Those multi-year agreements with deep-pocketed customers help provide Brookfield with very stable cash flow, and generous dividends as a result.

What's more, its stable of clean energy and transition power generation like nuclear energy make it a go-to source for corporate customers looking to go green. This is also helpful for other utility companies that find it cheaper in the short-term to buy from BEP rather than build their own wind or solar farms.

If you're looking for the best utility stocks with a rich history of dividends, then look no further than Consolidated Edison (ED, $95.16). This is a dividend stock that boasts an enviable payment history that dates back to the earliest days of stock markets in the U.S., when it was founded in 1823 as the New York Gas Light Company.

That's not just old news, either. In January, ConEd recorded its 49th consecutive annual increase for stockholders -- the longest period of consecutive annual dividend increases of any utility in the S&P 500 Index.

The metro region of NYC is still in very high demand, and like many of the megacities in the world has a resilient economy that is sure to survive the short-term ups and downs of the national economy. That will likely mean many more years of dividends and dividend growth for one of the Street's best utility stocks.

On one hand, Constellation Energy (CEG, $85.33) has one of the most meager dividend yields of all the utility stocks on this list. But on the other, shares have delivered a 60% return over the last 12 months, which is proof that CEG has something to offer.

CEG was listed separately in 2022, after a spinoff from utility giant Exelon (EXC). It is a true utility stock, generating and selling electricity. It boasts 32,400 megawatts of capacity consisting of nuclear, wind, solar, natural gas and hydroelectric assets.

It's always challenging to figure out whether a "new" utility stock like this is a worthy investment. But CEG became a standalone company at a great time, with demand and pricing on the upswing alongside financial independence and streamlined operations following its split from Exelon.

Dominion Energy (D, $62.00) is the largest of the utility stocks on this list and one of the five biggest electricity providers listed on U.S. markets. The company is a powerhouse of the sector, with a portfolio of assets that include roughly 30 gigawatts of electric generating capacity, mostly in Virginia and North Carolina.

Many investors are drawn to big utility stocks because they operate pretty much as legal monopolies in the regions they serve. That means a highly reliable business with a stable revenue model. And when you have the scale and balance sheet of Dominion on top of that, it makes for a nearly bulletproof business model.

It's already redeploying that capital to adapt to long-term sustainability concerns in the utility sector. For instance, Dominion has joined into the Southeast Hydrogen Hub coalition. Additionally, D is among just 33 organizations that have been invited to apply for part of $8 billion in federal matching grants to establish regional hydrogen hubs nationwide.

This utility stock isn't what it was in years past after carving out about $10 billion of its business. But for investors who like where the stock is headed, it could be the perfect time to bet on this sector leader.

If you're looking for a low-risk, income-oriented utility stock then Fluence Energy (FLNC, $22.58) isn't exactly the right choice. But if you're looking for an investment in the future of renewables and a smart energy grid, then consider this growth-oriented company as a unique way to play the utility sector.

You won't get a dividend, as Fluence is operating near breakeven at present as it continues to invest heavily in its plans for the future. But seeing as there aren't a ton of growth stocks in the utility sector, this one certainly stands out as one of the more dynamic names in the space.

Integrated gas power company New Fortress Energy (NFE, $41.05) is a unique utility stock in that it operates in two distinct segments: an energy infrastructure business and a shipping and logistics arm. Its terminals and infrastructure segment engages in the natural gas procurement, liquefaction and natural gas-fired power generation. Its ships segment, on the other hand, offers floating storage and regasification services to third-party customers.

ONE Gas (OGS, $83.90) is a regulated natural gas distribution utility firm. It is the parent company behind Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service. These entities provide natural gas distribution services that span 2.2 million customers in three states, across about 41,600 miles of distribution mains and 2,400 miles of transmission pipelines.

Founded more than a century ago in Tulsa, ONE Gas is a great example of the kind of slow-and-steady business that investors look for in the utility sector. It has little regional competition, and strong baseline demand from providing fuel to businesses and consumers.

OGS just bumped its quarterly per-share dividend payout to 65 cents from 62 cents. This makes distributions more than double the 30 cents per share it was paying at the end of 2015. This long-term dividend growth is another hallmark of the best utility stocks to buy.

Otter Tail (OTTR, $66.14) is one of the smaller utility stocks on this list. The company has a relatively modest electricity generation business that serves some 135,000 connections at residential, commercial and industrial customers in the Minnesota region.

Interestingly enough, however, OTTR also has a modest manufacturing segment engaged in machining, metal parts stamping, and production of plastic containers, among other services. The whole company posted about $1.2 million in revenues last year, with the electric utility arm of the company representing about 40% of that.

Utilities also tend to be dividend-paying stocks and in fact, one of the highest dividend-paying stocks from a yield perspective; the dividend for our three stock picks is larger than the average 1.3% dividend of S&P 500 companies, and their dividends are more stable because of the nature of utilities. For this reason, we are highlighting 3 top utilities, which we believe are a strong buy in this environment, to aid in covering your summer air conditioning bill.

Like many energy and utility companies, NRG has experienced stellar growth and profitability post-pandemic following skyrocketing prices, geopolitical issues abroad, and consistent demand. Operating results were up 25% year-over-year, and recent EPS of $1.68 beat by $0.06 and revenue of $701.72M beat by $49.44M, an increase of 27.33% YoY.

Looking forward, as investors look to companies that can weather increasing inflation and for stocks that should be able to cover their dividends, consider using our Quant screeners to help you find superior stocks in every corner of the markets, including our selection of Top Dividend Stocks.

U.S. News & World Report - "The passage of the Inflation Reduction Act is a game changer for electric utilities in the U.S., and investors may come to look at them differently than simply defensive holdings." said Roger Mortimer in U.S News on seven utility stocks to watch for.

The CPI component with the second highest YoY inflation was Utilities, at a whopping 26.7%. While high inflation is unequivocally bad for consumers, in this instance it is quite good for the utilities stocks.

Utilities are also currently the #1 sector in the Zacks Sector Ranks. Utilities typically provide a low risk, steady return for portfolios, and offer generous dividend yields to boot. If 2023 is anything like last year, it may be another good year for defensive stocks like utilities.

The York Water Company (YORW Quick QuoteYORW - Free Report) is a 200-year-old water collection and distribution utility. YORW owns a number of wastewater collection and treatment facilities, two reservoirs containing an estimated 2.2 billion gallons of water, a 15-mile pipeline from the Susquehanna River and nine groundwater wells. It serves a number of industries across three counties in south-central Pennsylvania, and although very old, is not very large, with a market cap of $635 million.

MGE Energy (MGEE Quick QuoteMGEE - Free Report) , is a public utility holding company involved in electric, gas, and energy operations. MGEE is based in Wisconsin and provides electricity to 159,000 households in Dane county, and distributes natural gas to 169,000 customers in seven Wisconsin counties. The company generates, purchases and distributes from coal-fired, gas-fired, and renewable energy sources as well as purchases power under short and long-term commitments.

Allete (ALE Quick QuoteALE - Free Report) is an extremely compelling investment at the moment. ALE is a diversified electric, energy, and water utility providing electricity for 15,000 customers, natural gas for 13,000 homes, water for 10,000 homes, and regulated utility electric services for 145,000 retail customers in northeastern Minnesota.

Allete is an extremely interesting investment because of its very diversified assets, which are highlighted by their growing alternative energy plants, and reasonable valuation. ALE is currently trading at 14.5x one-year forward P/E, nearing its ten-year low valuation of 13x, and well below its median of 18x. For this you get a standard utility business and company that is well positioned for evolving energy landscape. 041b061a72


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