6 Reliable Utilities Stocks to Buy Today


utilities stocks - 6 Reliable Utilities Stocks to Buy Today

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With all the Wall Street managers and big-wigs out for their final summer holidays, this is a great time to find the sectors — like utilities — that get buried during the frenzied markets when Wall Street is running on full steam. Utilities stocks are a broad category here. I’m not just talking about companies that deliver power to your home or office. It’s about the companies that manage the energy infrastructure that keeps the wheels of commerce rolling.

Yes, some of these utilities stocks are actual utilities, but others are key players in the energy patch while others are diversified infrastructure plays that will thrive as global growth expands.

Also, these stocks deliver solid dividends that may not be stunning, but they’re certainly better than you’re going to get in a CD or money market. And you get the growth kicker that certainly doesn’t come with cash equivalents.

  • Brookfield Infrastructure Partners (NYSE:BIP)
  • Chesapeake Utilities (NYSE:CPK)
  • Kenon Holdings (NYSE:KEN)
  • MDU Resources (NYSE:MDU)
  • PNM Resources (NYSE:PNM)
  • Suburban Propane Partners (NYSE:SPH)

Reliable Utilities Stocks: Brookfield Infrastructure Partners (BIP)

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Usually what we think of as utilities are power companies that operate in regulated markets over a region. They may be diversified through vertical integration — natural gas production, pipelines, refining and distribution — but rarely across varied industries.

That’s where BIP is unique. It operates more than 2,000 assets across 30 countries and five continents. Only about 38% of its operations are regulated energy-focused operations. It owns rail lines, properties, toll roads, ports, energy transmission lines and other assets that it manages.

It may seem a bit too diversified, but BIP has been in business since 1905, so it’s well experienced in managing, acquiring, and selling these assets.

Organized as a partnership, that means shareholders are considered direct partners and paid a piece of net income in the form of dividends. Right now, that dividend sits around 3.7%.

BIP is a bit expensive now, but the stock continues to perform well, especially compared to year-ago levels. The pandemic put a big dent in many of its operations. But global growth is already paying off. BIP is up 11% year-to-date.

The stock rates a B in my Portfolio Grader.

Chesapeake Utilities (CPK)

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Off the coast of Maryland and Virginia lies the Delmarva peninsula. It’s bordered on one side by the Chesapeake Bay and on the other by the Atlantic Ocean. There aren’t a lot of utilities stocks out there.

CPK has been running natural gas out to the Delaware and Maryland part of the peninsula since 1859. And the one thing this region has seen in the past century is growth.

This is where summer vacationers have come from Washington, D.C., Baltimore and beyond. It’s also a favorite route for snowbirds from the Northeast drive down to Florida. The point is, it’s a region that has growing demand but a small distribution footprint. That means it’s cheaper to service the area and it also means infrastructure is easier to maintain.

CPK currently yields 1.5%, but it has risen 20% year-to-date.

The stock rates a B in my Portfolio Grader.

Reliable Utilities Stocks: Kenon Holdings (KEN)

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This is another one of those utilities stocks that expands your perception of simply a power company. Its primary business is building and operating power stations in Israel and the United States. But it also owns a large stake in a container ship company as well as a Chinese electric vehicle (EV) maker.

And to add to this eclectic mix, it’s an Israeli company headquartered in Singapore. This is a unique company with some interesting complementary businesses. The Chinese EV maker could be a significant growth kicker to its other more traditional businesses. And it may be an interesting opening into the Chinese shipping and energy markets.

KEN is just pushing a market cap of $2 billion, so it’s not a huge firm. But it has some interesting prospects. The stock has a 5.2% dividend and is up 21% year-to-date. It also is trading at a tempting current price-to-earnings ratio below 3x.

The stock rates a B in my Portfolio Grader.

MDU Resources (MDU)

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Launched in 1924 to serve the upper Midwest — Minnesota, Montana, the Dakotas — today, MDU is a utility with a couple construction subsidiaries on the side. It primarily provides power (electric and natural gas) to Montana, the Dakotas and parts of Wyoming, however.

Given its access to the natural gas fields in Montana and Wyoming, its pipeline operations help keep margins solid for the company and rates acceptable to customers.

It also looks like a typical utility stock. With a $6 billion market cap, it has a current P/E of 15x after the stock has added 28% to its price year-to-date. MDU is a solid value with a steady business and safe 2.4% dividend.

The stock rates a B in my Portfolio Grader.

Reliable Utilities Stocks: PNM Resources (PNM)

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As we saw during the winter storm in Texas this year, utilities stocks in Texas are an interesting group. Three smaller utilities went bankrupt after that horrible storm. And the region is well known for having a different kind of relationship with utilities since it has chosen not to be linked up to the U.S. national grid.

PNM provides electricity to Texas and New Mexico. This has been a bumpy area for electricity production and distribution. But today, PNM is bolstered by all the fracking activity in the energy patch, specifically the Permian Basin shale fields.

Investors are still cautious on PNM, but it has the resources and demand to keep a solid business going, and it’s cheap. The stock has current P/E of 19x and a 2.7% dividend. PNM stock is slightly underwater year-to-date (down slightly more than 1%) but that should change as energy demand increases.

The stock rates a B in my Portfolio Grader.

Suburban Propane Partners (SPH)

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The name says it all. After starting as a propane service and supply company in 1928, SPH now has 668 propane operations in 41 states, serving over 1 million customers. In its original New Jersey market, it also offers fuel oil and electricity, but its main business is propane.

But its market cap is still under $1 billion. That means institutional investors aren’t too involved, but it’s big enough to keep momentum traders away. And it’s a partnership, which means its net profits are paid out directly to shareholders as big dividends. This is one of those quiet utilities stocks that delivers quality and stability without a lot of flash.

Right now, SPH has a current P/E of 10x, and it has risen 8% year-to-date. And it has an alluring 8% dividend.

The stock rates a B in my Portfolio Grader.

On the date of publication, Louis Navellier has no positions in any stocks in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (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.

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