Although not known for having a lot of growth potential, utility stocks are a safe investment because, well, everyone needs utilities!
It’s hard to picture a world where water, electricity, and gas aren’t basic necessities. Utilities also provide current cash flow, so you can put that money to work right away.
Price regulation makes it difficult for companies to displace their competitors’ business. Plus, because of the rules governing regulated utility companies, capital investors can easily see how money is being used and what the company’s expected growth is.
Here is a list of some of the top utility stocks on the market that you can invest in today.
Duke Energy Corp. (NYSE: DUK)
Duke Energy Corp. is a $67 billion company that has recently seen almost 15% gains. Cash flow is relatively predictable: The company has paid quarterly dividends on its common stock for 92 years, and they have increased annually since 2007.
One of the company’s strategies for future growth is investing in regulated businesses, with the hope of getting a green light from the government to increase rates.
The company recently announced a goal of achieving net-zero carbon emissions. This is similar to its 2017 goal of reducing carbon emissions by 40% in 2030; since then, high demand and subsequent declining costs of renewables have allowed the company to update its goal to 50%.
The Southern Company (NYSE: SO)
With 4.4 million customers, the Southern Company is the leading gas and electric company in the Southeast. It has a 19-year history of annual dividend increases; it’s dividends have also either remained consistent or increased for 71 years. The company owns electric utilities in four states and boasts reliability, good customer service, and below-average prices.
As of mid-2019, shares were up 25%, well above the S&P’s 19%. This large company will continue to have a consistent residential and industrial customer base, which ensures a regular cash flow.
Like with other utility companies, investors can find stable and high dividends in the Southern Company but enjoy the additional assurance that they are investing in a large company with a solid history and foundation.
NextEra Energy (NYSE: NEE)
Named by Fortune as one of the World’s Most Admired Companies of 2019, NextEra Energy is a pioneer in sustainable and renewable energy. It owns Gulf Power Company and Florida Power & Light Company, the largest rate-regulated utility company in the country.
NextEra Energy has positioned itself to be able to offer rates 30% lower than the national average, appealing for both regulators and customers. This is good news for investors looking to buy stock in a utility company with a rock-solid foundation that is also oriented toward a more sustainable, ethical future.
Enbridge (NYSE: ENB)
A transporter and distributor of crude oil and natural gas, Canadian company Enbridge conducts business through five segments: gas pipelines, gas distribution, green power and transmission, liquids pipelines, and energy services. These secured, long-term contracts ensure that cash flow will never be one of Enbridge’s problems.
With a relatively inexpensive stock (currently around $35), a 6% dividend yield, and a promising expectation of growth, Enbridge is a good investment choice, particularly for momentum investors. Buy it cheap while picking up a great dividend.
ONEOK, Inc. (NYSE: OKE)
ONEOK, Inc. is a natural gas liquids company with consistently stable dividends and growth. Since most of its revenue is tied to fee-based assets, ONEOK is protected from the inconsistencies of more volatile and inflation-vulnerable commodities.
The company’s current projections include a 10% increase in net income for 2019. And with some capital projects in its plan, ONEOK is poised to have a good year in 2020.
ONEOK distributes energy across the United States and is the hub of the natural gas industry, which deals in the cleanest burning of all fossil fuels. Due to the demand for economical and sustainable sources of energy, more and more energy companies will rely on ONEOK’s minimum-carbon-footprint operations.
The bottom line
With the stock market in an unpredictable flux right now, investors are looking to safer, more stable sectors. Utility stocks can not only provide that stability but can also yield some surprisingly good dividends.
