SPECIAL REPORT The Top 7 Stocks for 2024

Market Crash Coming? 3 Utilities Stocks to Buy for a Soft Landing


  • These utility stocks offer rock solid dividends in any economic climate.
  • Northwest Natural (NWN): The Oregon gas utility has raised its dividend for more than 50 years in a row.
  • NextEra Energy (NEE): This electric utility has both a strong regulated business and leading renewable energy operation.
  • Atmos Energy (ATO): The gas utility is cashing in on Texas’ rapid economic growth.
utilities stocks - Market Crash Coming? 3 Utilities Stocks to Buy for a Soft Landing

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There’s increasing talk about a potential market crash. Several commentators have drawn parallels between 2023 and 1987 in that both years began with a massive run-up in stocks even while underlying fundamentals were fairly flimsy. The run in 1987 culminated in a historic market crash on October 19th of that year. Will history repeat? Maybe these utilities stocks can help!

Even if there’s no plunge on the menu, it’s a good time to take some precautions. The Federal Reserves’s aggressive monetary tightening campaign seems set to continue, and that casts a long shadow throughout the market. In addition, September is historically known to be the worst month of the year for stocks on average.

All this makes it a good time to load up on utilities stocks. After all, utilities are a defensive sector that can stand firm when the market is sinking. Regardless of what the economy is doing, people tend to pay their water, gas,and electric bills.

These utilities stand out in particular is they are all dividend aristocrats, meaning that they have increased their dividends for at least 25 consecutive years. As such, let’s meet these top utility stocks that offer reliable income in any market.

Northwest Natural (NWN)

Image of a gas burner with a blue flame
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Northwest Natural (NYSE:NWN) has one of the most exemplary dividend track records in America. It has increased its dividend for a stunning 67 consecutive years. A company that has increased its payment annually dating back to the 1950s can certainly thrive even if there’s another stock market crash.

Northwest Natural is a gas utility primarily focused on the state of Oregon. In business since 1859, the company nowadays owns more than 14,000 miles of pipelines and serves approximately 2.5 million people.

Selling natural gas may not be particularly exciting, but it’s as steady of a business as it gets. Northwest Natural has been able to slowly grow its earnings as its state gains more inhabitants. Amid a significant sell-off throughout the past year, shares now go for just 14 times forward earnings and offer a nearly 5% dividend yield.

NextEra Energy (NEE)

Nextra Energy (NEE) website on a mobile phone screen
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NextEra Energy (NYSE:NEE) is a power utility that offers investors a unique package.

It operates Florida Power & Light, a large regulated power utility that is cashing in from Florida’s rapidly growing population and economy.

NextEra also has its more adventurous side in its renewable power business. The firm was an early player in the wind energy sector, allowing it to secure many of the better wind energy sites years ago. NextEra is now building on that success with an ambitious rollout for its solar power and energy storage facilities.

These businesses build nicely on one another, with the regulated utility generating steady cash flows and providing more balance sheet heft for funding the fast-moving renewables business.

NEE stock had been flying high amid a rush of government incentives for clean power. However, fading enthusiasm for solar stocks has caused NEE stock to slide nearly 25% throughout the past year. This gives investors an opportunity to own this fast-growing dividend aristocrat utility stock at a more favorable entry point.

Atmos Energy (ATO)

TELL stock: a row of natural gas tanks pictured in the evening. Natural gas stocks
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Atmos Energy (NYSE:ATO) is America’s largest pureplay natural gas utility. It serves more than three million customers in eight states ranging from Virginia to Colorado. Its largest market is Texas, which generates the majority of Atmos’ revenues.

Like NextEra in Florida, Atmos is enjoying favorable economic tides in Texas. The state of Texas has boomed in recent years with cities like Austin and Houston attracting huge numbers of people coming from other parts of the country. The pandemic seemingly further accelerated this trend as workers enjoyed more geographic flexibility.

Atmos is turning this into downright enticing topline growth. In fiscal year 2018, it brought in $3.1 billion of revenues. Analysts expect that to jump to $4.7 billion this year. That’s a nearly unprecedented growth rate within the utility industry. At the same time, Atmos is recession-resistant and will serve investors well in a future market downturn. This one and the other utilities stocks we mentioned would all be welcome additions to your portfolio.

On the date of publication, Ian Bezek held a long position in NWN stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/08/market-crash-coming-3-utilities-stocks-to-buy-for-a-soft-landing/.

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