The 7 Best Utility Stocks to Buy Now

Founded in 1907 with a current headquarters in The Hague, the Netherlands, Shell has gone through a bit of reinvention, moving its home base to the United Kingdom and changing its name to Shell. Its historic core business has been in the production and sale of oil and natural gas as well as manufacturing chemicals. No, no one can guarantee upside, irrespective of whether we’re discussing the best utilities stocks or the merely good enough.

Stock/Mutual Fund Screening – Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return. All three of these stocks have enjoyed favorable price action over the last month, outperforming the general market handily. Interestingly enough, all three have also seen favorable earnings estimate revisions, providing shares the fuel needed to continue climbing. While all utilities are heavily regulated, not all companies have the same balance sheets, debt levels or long-term prospects.

Investors should bear in mind that trading individual stocks is risky. When considering individual stocks, investors should carefully research companies to assess their financial circumstances (including tolerance of risk) before buying. Cadiz Inc. (CDZI), Fluence Energy Inc. (FLNC), and Enel Chile SA (ENIC) are among the top-performing utilities stocks this month, each providing investors with returns in excess of 120% in the past year.

American Water Works Company, Inc. (AWK)

An asset is typically considered overbought when the RSI is above 70. The most overbought stocks in the utilities sector presents an opportunity to go short on these overvalued companies. But it remains to be seen how the broader industry will execute the transition to renewables. And some states are better suited for certain types of renewable energy than others, not to mention different regulations and permitting processes. Each week our editorial team keeps you up with the latest financial news, shares reading recommendations, and provides useful tips on how to make, save and grow your money.

However, volatility appears muted between $30 and $40, suggesting a general confidence in price stability. Finally, analysts peg NRG as a strong buy with a $44.25 average price target, indicating over 16% upside. Insider Monkey tracks data for about 866 hedge funds, which we have used to pick the best utility stocks among the most popular hedge funds. We also chose stocks with a positive analyst rating, solid fundamentals, and growth catalysts. American Water Works expects to grow its earnings per share (EPS) at a 7% to 9% compound annual rate between 2023 and 2027, making it one of the fastest-growing utilities in the country.

Most people invest in utility stocks using a brokerage account. And I recommend Webull if you are looking for a brokerage account. Dividend yield and dividend growth are often inversely related. In other words, higher dividend yields usually come with lower potential dividend growth. Some utilities fall on tough times and have to reduce their dividend.

Exelon Corporation (EXC)

Learn more about the Simply Investing report for high-quality dividend stock recommendations. It is only when the debt to equity ratio starts to exceed 1.5 to 1 that I may get a little concerned. Ask these questions to understand past and potential dividend growth. For example, an electric utility may produce power but rely on a partnership with another utility to transmit it and sell it. Furthermore, some electric utilities are vertically integrated.

• TransAlta (TAC) makes a strong case for investment, given its growth prospects, strong return on equity and ability to increase shareholders’ value.
• Meanwhile, it has a very conservative dividend payout ratio (it has targeted an average between 50% to 60% of its adjusted EPS).
• The RSI is a momentum indicator, which compares a stock’s strength on days when prices go up to its strength on days when prices go down.
• The best utilities can steadily increase their earnings per share by investing in initiatives that earn high returns on investment.

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. Each of these utility stocks is a holding in my model dividend stock portfolio here at Dividends Diversify.

Hawaiian Electric Industries (NYSE:HE)

These strengths should provide a company with the financial flexibility to steadily expand its earnings and its dividend. Those factors help power an attractive total stock return to shareholders — the combination of a stock’s dividend yield and its stock price appreciation. NextEra Energy operates a regulated electric utility in Florida. It also owns and operates natural gas pipelines, electricity transmission lines, and renewable energy projects that generate predictable income backed by long-term, fixed-rate contracts. These businesses supply NextEra with steady cash flow to support its dividend and invest in expanding its utility business.

For example, utility providers have stocks with low volatility and are often considered one of the “safest” sectors to invest in. As investors patiently await the winds to shift, Southern Company cushions them with a forward yield of 4.13%. Additionally, it has raised its payouts for 21 consecutive years, with 33 years of consistent payments.

They are also a leading distributed energy infrastructure company, providing a fiber optics network and telecommunications services. Utilities are remarkable among stocks for their steadiness and regular dividends. People and businesses need everyday power and water and will not cut on such spending. This makes utilities somewhat the ultimate defensive stocks, as well as a sector of the financial market with lower volatility.

Recent utility Headlines

Unlike Real Estate Investment Trusts (known as REITs), utility stock dividends are considered qualified for US tax purposes. The tax rate that you will pay depends on your specific tax situation. You should consult with your tax advisor for information specific to your tax status. That is the risk of losing all or most of your investment dollars. A utility stock investor should be aware of the pros and cons of investing in utility stocks. Then, take delivery, store it and provide distribution to customers at a local level.

Vistra is strongly bullish with many analysts stating the stock is overbought given the number of active purchases driving the stock price higher. In addition to a discounted valuation, we consider NRG to have a strong growth outlook with its solid A growth grade. NRG’s growth plan focused https://1investing.in/ on its January 5, 2021, acquisition of Direct Energy in excess of three million additional customers across North America. Additionally, NRG signed 2.6 gigawatts of renewable Power Purchase Agreements (PPAs) that include 45% currently in service in geographically diverse Texas.

How Are Utility Stock Dividends Taxed?

CWCO, VIRC and ITT made it to the Zacks Rank #1 (Strong Buy) momentum stocks list on September 13, 2023. 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. Furthermore, its recent launch of an EV charging subscription service in North Carolina underscores its forward-thinking approach. Coupled with a forward prediction of a 17% upside by TipRanks, Duke Energy exemplifies endurance and promises investors a fortified portfolio corner. The company had approximately 28,564 megawatts of net generating capacity — 77,000 circuit miles of transmission and distribution lines; and 696 substations.

• However, with the looming specter of the Fed’s intense monetary tightening, an undeniable atmosphere of unease runs throughout the market.
• While explosive growth or deep value are popular methods, so is income/dividend investing.
• If you don’t yet have a brokerage account or are looking for a new broker, be sure to check out our list of the best online brokers and best investment apps.
• When it comes to clean energy, this Juno Beach, Florida company  dominates the market.

This is because they can request a rate increase if market conditions dictate the need. First of all, electric utilities produce, transmit and sell electricity to customers. Dominion certified financial planner salary in india Energy, Inc. has committed to achieving net-zero carbon dioxide and methane emissions by 2050, and actively invests in renewable energy production facilities to achieve those goals.

In addition to the portfolio integration, its revisions grade is solid at a B- and two analyst upward revisions within the last 90 days, following solid Q results. The best way to invest in renewable energy is to buy mutual funds or exchange-traded funds that build portfolios of green energy companies. There are a wide variety of renewable energy funds managed according to different strategies. It’s always wise to research the utility you’re interested in because utilities receive licenses from state governments.

That’s why it is the most valuable utility and the top holding of the ETF. The stock is up 231% over the last 10 years, beating the performance of the S&P 500. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +24.32% per year. These returns cover a period from January 1, 1988 through July 31, 2023.

It plans to triple its capacities by 2027 and has a total of 4x its current 15 GW capacities in the growth pipeline (68% solar). Some of the stocks seeing price strength are LWAY, LYTS, KRT, LMB and CWCO. CWCO, SWDBY and AEO made it to the Zacks Rank #1 (Strong Buy) momentum stocks list on September 8, 2023. Both Consolidated Water (CWCO) and SJW Group (SJW) are efficiently meeting the water and wastewater service requirement of their customers.