Diving into the world of stocks, one might overlook steady performers in favor of flashier sectors. However, for those with a keen eye, promising utility stocks shimmer with potential in the vast landscape of equity investments. Utilities consistently serve homes and businesses, ensuring a flow of electricity, natural gas and water. These mammoth entities are often shielded by regulatory umbrellas, making them one of the most steadfast investments in the stock market. While they might not make headlines with meteoric rises, utility stocks offer the allure of gradual appreciation and the sweet consistency of dividend cash flows. Hence, if you’re hunting for both resilience and reliability, these three utility stocks beckon with open arms.
Duke Energy (DUK)
Duke Energy (NYSE:DUK) stands out as a sturdy pillar in the utilities landscape, benefitting from stable demand and the protective edge of regulation. Located in the Carolinas, an area known for its reasonable living costs, Duke offers geographical and economic advantages for its massive customer base. Moreover, it enjoys a natural monopoly as a public utility, enhancing its long-term appeal to investors.
Despite a recent earnings miss, Duke still reported impressive revenue of $6.58 billion in the second quarter, exceeding expectations by $20 million. Furthermore, the company reaffirmed its earnings-per-share guidance for 2023 and projected a steady growth of 5% to 7% for the next few years. Trading at just 2.4 times forward sales estimates, the stock yields a spectacular 4.5%, boasting 11 consecutive years of payout growth. Duke Energy is a balanced, low-volatility portfolio choice, ensuring safety and consistent performance.
NextEra Energy (NEE)
Amidst the recent setback for utility stocks due to rising interest rates, NextEra Energy (NYSE:NEE) has found itself on a downtrend. However, this dip might present an opportune moment for discerning investors to scoop up a promising dividend-rich stock for the long haul. It’s essential to note that NextEra is not just any typical energy company. The firm is essentially a blend of public utility and a green energy champion, boasting dual powerhouses. Florida Power & Light offers consistent revenues, being America’s largest electric utility, while NextEra Energy Resources (NEER) stands tall as the globe’s predominant producer of solar and wind energy.
Its financial performance has been spectacular of late. The firm reported a jaw-dropping $2.795 billion in profits in the second quarter, a significant improvement from the prior year. On top of that, its collaboration with CF Industries Holdings (NYSE:CF) in the green hydrogen realm further solidifies its commitment to a sustainable future. Fortune has lauded NextEra’s strides, ranking it among the most admired global companies. Such accolades validate the company’s formidable stance in the renewable energy sphere.
Southern Company (SO)
Southern Company (NYSE:SO) is a formidable gas and electric utility behemoth headquartered in Atlanta, Georgia. Serving millions of customers across several states, this utility titan stands tall as the second-largest in terms of its customer outreach. While its recent performance has been somewhat subdued, the combination of its vast customer base and strategic positioning in a state experiencing demographic shifts points to incredible prospects ahead.
The firm is performing exceptionally well in terms of its financials, especially from a profitability standpoint. Its EBITDA, net income, and return on common equity metrics stand at an impressive 36.7%, 11.2%, and 10.4%, respectively. These metrics are ahead of sector averages by almost double-digit margins.
Moreover, SO is an excellent income stock pick, boasting a stellar 4.1% yield and 21 consecutive years of growth in its payouts.
On the date of publication, Muslim Farooque 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.
