Utility stocks can be a low-risk way to make income from dividends. These companies have a solid foundation and excellent operational capabilities. In addition, utilities demand will never go away. It is crucial to research these stocks before you invest and make sure that you choose the right company.
Dominion Energy
If you are looking for a high-yielding utility stock that provides a steady income, then consider Dominion Energy. The stock has risen nearly 12% in the past year, and it offers a 3.3% dividend return. This yield is lower than the average utility sector yield of 3.75%. The company is reliable and the dividend is likely growing over the long-term.
During the current fiscal year, Dominion Energy is predicting 14% revenue growth. Moreover, the company has a $37 billion capital expenditure plan that is expected to drive annual earnings growth of 6.5% through 2026. This money will be used to build wind and solar farm. This money will allow the company to adapt its operations to climate change and emission reduction trends.
Exelon Corporation
Paul Fremont of Mizuho has upgraded the price target on Exelon Corporation, bringing it up to $46 from $32. The stock is expected to grow faster than other stocks in the sector. He projects a 13.4% FFO/debt ratio in 2024. With a relatively light regulatory calendar, the company is in a strong position for 2022.
The company's large size and geographic diversification give investors plenty of room for growth in an uncertain energy market. The company also has a history of growth in dividends and plans to spin out its previous acquisitions. This strategy will enable it to grow rapidly in 2022. UGI Corporation is another top utility stock. It supplies natural gas, propane, and electricity to businesses. It has a strong dividend payout of 3.1% and a valuation in excess of $8.8billion. Otter Tail Corporation, a utility stock with exposure to electricity distribution as well as PVC pipe manufacturing, is another utility stock that is well-positioned. It also has a part stamping and manufacturing business.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners, (BIP) operates infrastructure assets worldwide in the energy, transports, midstream, and data sector. The company owns and manages 61,000 kms electricity transmission lines, 4,200km of natural gas pipes, and 7.3 Million connections to electricity or gas networks. It also holds interests in water heaters and rail operations.
Investors will be able to benefit from Brookfield Infrastructure Partners’ continued growth. This company has a long history of making sound investments. It is also comfortable with its dividend payments. It continues to reap the benefits of its infrastructure investments.
American States Water
American States Water is a great utility company to invest in. It has a long history of increasing dividends. It is one of the best dividend stocks, having increased its dividend for the past 668 years. The company's management projects a dividend increase of 7-10% per annum through 2026. Its cash flow has been extremely steady which makes it a good dividend stock. Water utilities tend to be more conservative investments than gas utilities, as demand for their services is more stable than that of gas.
American States Water supplies water and electricity to Southern California. The company has long-term agreements with the U.S. government including 11 military bases. This diversification of business models provides the company with both recurring revenues and growth opportunities. Diversifying from its dependence on one state is an important step towards long-term growth.