7 Top-Performing Utility Stocks for Steady Growth

Stocks to buy

With the jobs market again continuing to surprise the doom-and-gloom folks, now might not seem a great time to consider high-performing utility stocks; that is, utility companies and related businesses that print relatively robust operational figures, thus making for steady growth investments. However, read between the lines and you may come away with a different perspective.

Primarily, we really don’t know what will materialize next. For example, because the labor print came in so hot, Wall Street responded only modestly because the Federal Reserve might delay interest rate cuts. If so, that wouldn’t be great for pure growth-oriented enterprises. However, it could boost high-performing utility stocks due to their underlying indelible nature.

And even if the Fed decided to cut rates at the soonest opportunity, reliability utility stocks will still likely benefit. After all, we’re not talking about a cyclical industry here. Rather, whether the economy is humming or dying, people (and businesses) need to pay their bills.

Therefore, high-performing utility stocks deserve extra consideration.

Algonquin Power & Utilities (AQN)

Source: zhao jiankang / Shutterstock.com

A Canadian renewable energy and regulated utility conglomerate, Algonquin Power & Utilities (NYSE:AQN) features assets across North America. Primarily, the company invests in hydroelectric, wind and solar power facilities, along with utility businesses. However, circumstances have not been auspicious for AQN, with shares down about 10% since the start of the year.

Still, what AQN ranks among the high-performing utility stocks given the underlying difficult post-pandemic conditions. Despite the impact of the Covid-19 crisis, Algonquin posted sales growth of 3% in 2020 compared to the prior year. This demonstrates the resilience of utilities-based steady growth investments. Also, on a trailing-12-month (TTM) basis, its sales clocks in at $2.78 billion, up modestly from 2022’s monstrous growth year.

Just as well, Algonquin delivers the goods in terms of passive income. Right now, the company offers a forward yield of 7.15%, well above the average for reliable utility stocks at 3.75%. While the red ink presents value trap concerns, it’s also worth noting that AQN trades at a forward earnings multiple of 10.82x. This could turn out to be a discount.

Duke Energy (DUK)

Source: Jonathan Weiss / Shutterstock.com

One of the more popular enterprises among high-performing utility stocks, Duke Energy (NYSE:DUK) is an electric power and natural gas holding company. Based in Charlotte, North Carolina, the company covers several compelling states in the eastern region of the nation. I say compelling because young people have been moving to states like the Carolinas for cost-of-living reasons.

Stated differently, Duke is positioned where the money will be, adding confidence to the fundamental growth narrative. But keep in mind that Duke financially represents one of the steady growth investments. While 2020 saw a Covid-impacted dip, since then, Duke has been marching higher in the top line. On a TTM basis, it sports sales of $29.2 billion, up from the $28.8 billion posted in 2022.

Now, do you pay a premium for this stable growth? At a forward earnings multiple of 15.85X, you do. However, you should also note that Duke offers a forward yield of 4.34%. Also, analysts peg DUK as a consensus moderate buy.

FirstEnergy (FE)

Source: Pand P Studio / Shutterstock.com

Headquartered in Akron, Ohio, FirstEnergy (NYSE:FE) is an electric utility. Per its public profile, its subsidiaries and affiliates are involved in the distribution, transmission and generation of electricity. In addition, it offers energy management and other energy-related services. While a relevant enterprise among high-performing utility stocks, FE lost about 12% of equity value since the January opener.

However, I’d be remiss to not point out that in the trailing month, shares gained almost 5%. And since bottoming on Oct. 2, shares have generally printed a series of higher highs and higher lows. Even better, the move doesn’t seem to be based exclusively off of technical hocus pocus. Following a pandemic-disrupted revenue dip in 2020, the company has been steadily expanding the top line.

Further, on a TTM basis, FirstEnergy rang up sales of $12.9 billion. That’s noticeably higher than the $12.5 billion it registered for the last fiscal year. Also, TTM net income stands at $524 million, substantially higher than the $406 million in 2022.

Regarding passive income, the company carries a forward yield of 4.42%. Thus, it makes a solid case for reliable utility stocks.

Exelon (EXC)

Source: photosounds / Shutterstock.com

Hailing from Chicago, Illinois, Exelon (NASDAQ:EXC) represents the largest electric parent company in the U.S. by revenue. Per its public profile, it’s also the largest regulated electric utility in the U.S. with approximately 10 million customers. Just from these top-level stats, EXC makes a solid candidate for steady growth investments. To be fair, though, EXC’s loss of 9% since the January opener raises some eyebrows.

Nevertheless, if you’re looking for quality high-performing utility stocks, Exelon should be on your radar, especially during these ambiguous times. Now, Exelon appears to have suffered a severe drop in revenue in 2021. That’s due to a splitting of the utility and power generation businesses. Having said that, post-split, Exelon has demonstrated encouraging growth.

For example, on a TTM basis, the company posted sales of $21 billion. That’s noticeably higher than the $19.08 billion rung up in 2022. So, it makes for one of the reliable utility stocks. Let’s also not forget that the company offers a forward yield of 3.67%.

Sempra Energy (SRE)

Source: Michael Vi / Shutterstock.com

Headquartered in San Diego, California, Sempra Energy (NYSE:SRE) is one of the largest utility holding companies in the U.S. with nearly 40 million customers. And since we’re talking about Southern California, these customers are generally better off than average. Another attribute that Sempra benefits from is that SoCal is a destination region and a coastal powerhouse. Stated differently, the area will always be relevant.

For that reason, you should consider it one of the high-performing utility stocks built for the long haul. Sure, SRE is down about 6% since the beginning of the year. Almost certainly, that’s a temporary blip in the utility giant’s narrative. Again, the region that Sempra serves is too relevant, both from a residential and business perspective.

Also, it delivers the goods financially, making it one of the best steady growth investments. For instance, 2020 saw revenue growth despite the Covid-19 impact. On a TTM basis, Sempra prints sales of $16.7 billion, up from 2022’s haul of $14.4 billion. As a bonus, the utility offers a forward yield of 3.29%.

NextEra Energy (NEE)

Source: IgorGolovniov/Shutterstock.com

A stalwart in the environmental, social, governance (ESG) arena, NextEra Energy (NYSE:NEE) is one of the most popular reliable utility stocks. According to its public profile, NextEra is the world’s largest electric utility holding company by market capitalization. It offers a range of services, including generation of renewable energy from wind and solar networks.

Still, despite its extraordinary relevance, the go-green segment has been hit hard. Since the start of the year, NEE gave up almost 29% of equity value. Admittedly, the severity of the red ink is distracting and warrants a cautious approach. That said, NEE popped up 9% in the trailing month, offering some comfort to prospective investors.

In terms of the print, NextEra is holding its own. While it incurred a dip in sales in 2020 and 2021, 2022 saw a rebound in growth. Further, TTM sales clocks in at $27.4 billion, up from the prior year’s tally of nearly $21 billion.

To help sweeten the pot, the company offers a forward yield of 3.13%. It also carries a consensus moderate buy view among analysts.

Brookfield Infrastructure (BIP)

Source: T. Schneider / Shutterstock

Based in Toronto, Canada, Brookfield Infrastructure (NYSE:BIP) engages in the acquisition and management of infrastructure assets on a global basis. Its network includes utilities, transportation, energy and communications infrastructure. While it might not be a pure-play idea among high-performing utility stocks, its related business model deserves consideration.

Now, as a warning, BIP is not unlike other utilities in that it has incurred a rough year in 2023. Since the beginning of January, BIP slipped 10%. Still, it’s also fair to point out that the bulls are trying to recover lost returns. In the trailing month, BIP gained almost 9%. Further, the company has increased its top line on a consecutive basis since 2015.

Even better, on a TTM basis, Brookfield’s revenue comes out to $16.7 billion. That’s noticeably above 2022’s tally of $14.4 billion. Also, BIP trades at 0.79x trailing sales, meaning that it’s technically undervalued.

For good measure, the company carries a robust forward yield of 5.43%. And a unanimous strong buy consensus makes BIP one of the steady growth investments you can trust.

On the date of publication, Josh Enomoto did not have (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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

Articles You May Like

3 Pharma Stocks to Sell in April Before They Crash & Burn
Wall Street Favorites: 3 Dividend Stocks With Strong Buy Ratings for April 2024
Billionaire Bargain Bin: 3 Stocks the Forbes 400 Loves (That You’ve Never Heard Of)
LCID Sell Alert: 2 Reasons Lucid Stock Is NOT a Keeper
Nvidia Stock’s Roller Coaster: Buckle Up for Short-Term Bumps, Long-Term Thrills