When markets get crazed, utility stocks are often standout opportunities.
In fact, investors will jump into utilities for their stable cash flows, and high dividend payout ratios. Many have also become even more attracting thanks to explosive electricity demand – especially from data centers and artificial intelligence.
We have to consider that electricity demand could increase 38% between 2020 and 2040, which is up from the 9% increase in demand between 2000 and 2020. In addition, according to the World Nuclear Association, electricity demand is increasing twice as fast as overall energy use, and is likely to rise by more than half to 2040.
One of the top utility stocks set to benefit is Eversource Energy (SYM: ES).
With a yield of 5.5%, Eversource Energy (ES) is a public utility holding company, engages in the energy delivery business. The company operates through Electric Distribution, Electric Transmission, Natural Gas Distribution, and Water Distribution segments.
Most recently, the company exited its offshore wind business just last year.
In fact, it completed the sale of its 50% interest in a 132-megawatt South Fork Wind project, and a 704-megawatt Revolution Wind project. It also announced the sale of its Aquarion Water Company to the Aquarion Water Authority for $2.4 billion.
The company is now focusing on the transmission and distribution of electricity, and the distribution of natural gas. Plus, it just paid out a quarterly dividend of $0.7525 on March 31 to shareholders of record as of March 4.
Recent earnings haven’t been too shabby either.
In its most recent quarter, the company’s earnings came in at $72.5 million, or 20 cents per share, as compared to a year earlier loss of $1.288.5 billion, or $3.68 per share. It also posted full-year 2024 earnings of $811.7 million, or $2.27 per share, as compared to a year-earlier loss of $442.2 million, or $1.26 per share.
“With the strategic decision to divest Aquarion, which is expected to close by late 2025, we will greatly strengthen our balance sheet and continue to focus on our regulated electric and natural gas utility businesses,” said Chairman, President, and Chief Executive Officer Joe Nolan, as quoted in its earnings press release.
“While we see some headwinds in 2025, we also have extensive and attractive opportunities for system investments, as evidenced by a 10 percent increase in our five-year investment plan through 2029, that will strengthen the infrastructure in our region and support the growth of clean energy. We believe these opportunities will enable us to achieve our long-term growth rate of 5 to 7 percent,” he added.
Moving forward, the company provided 2025 EPS guidance of $4.67 to $4.82, with EPS growth expected to gain 5% to 7%.
In short, if you’re looking for stability in an unstable market, bet on ES and collect its yield.
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