Nearly every home and company in the country receives utility services. This supplies them with water, natural gas, and electricity. These tightly controlled businesses rank among the biggest and most reliable equity investments on the stock market.
When you invest in utility companies, you can often anticipate gradual but consistent growth and reliable dividend income. If you’re interested in such investments, you’d want to know the best utility stocks in the market. This article provides you with the top utilities stocks and necessary information you should note before investing.
10 utility dividend stocks with high yields for December 2022
- Algonquin Power & Utility Corp (AQN) – 10.885
- Edison International (EIX) - 4.55%
- Avangrid INC (AGR) - 4.19%
- First Energy Corporation (FE) - 3.78%
- Portland General Electric Company (POR) – 3.73
- Public Service Enterprise Groups INC. (PEG) - 3.62%
- American Electric Power Company (AEP) - 3.54%
- DTE Energy Co. (DTE) - 3.30%
- One Gas INC (OGS) – 3.31%
- Vistra Corp (VST)- 3.22%
- Eversource Energy (ES) - 3.12%
Types of Utility Stocks
Just like any stock market, the utility sector is divided into different industries, including:
Energy producers: These are companies that make power from different renewable and non-renewable sources like solar, water, and wind.
Energy Distributors: This sector ensures that the products are available for those households and companies that need them. The distributors achieve this by buying, selling, and transmitting electricity.
Energy service operators: ESOs deal with individual meters that deliver electricity to customers' residences and places of business. Strict regulations apply to their tariffs
and business activities.
Natural gas distributors: Natural gas suppliers transmit gas throughout the nation and supply it directly to individual homes and businesses, just like electricity transmitters do.
Sewage and water: Some water and sewage companies are owned by the government, but this isn't always the case. These utilities are sometimes supplied by for-profit, private businesses.
Advantages of Investing in the Best Utility Stocks With Dividends
There are different benefits to investing in the best utility stocks. We've outlined these advantages below:
Consistent stock pricing: Unlike other unpredictable investments, utility stocks have stable prices. Individual stocks are still riskier than diversified index funds, but utility stocks are generally thought to be "safe" equity investments.
Resistant to economic fluctuation: Compared to other sectors, the demand for utilities remains constant regardless of the state of the economy. In a down market, utility stocks are less likely to suffer disproportionate losses.
Regular dividends: Numerous utility equities have a long history of providing consistent dividends. Typically, the dividend yields of most utility companies are not particularly high. However, this is mainly due to the consistency with which dividends are paid.
Do Utility Stocks Pay High Dividends?
If you're wondering, "Why do utility stocks pay high dividends?" here's what you should know: Some utility companies can afford to pay high dividends if there are reliable revenue streams. This makes them an attractive long-term investment option.
What Is the Best Utility Stock To Buy Right Now?
If you’re interested in buying top utilities stocks, then you should know that there are a plethora of options to choose from. However, there are a few that are better than their counterparts. In the following sections, we look at the best utility stocks with dividends that you can buy.
7 Best Utility Stocks to Buy Now for Income
Here are the best dividend utility stocks in the market:
American Water Works Co. Inc. (AWK)
American Water Works is working to reverse the decades-long decline in accessible, safe drinking water. Listed as the largest water and wastewater company in the United States, American Water Works has its headquarters in New Jersey. It provides services to homes, public buildings, commercial and industrial establishments, and more for over 14 million people in 24 states.
If you're looking for the best utility stocks that have both defensive and growth characteristics, consider AES Corp. Using its renewable and thermal production facilities and distribution operations, the company delivers electricity and utility services to its customers. This organization has offices across North America, South America, Mexico, the Caribbean, Europe, and Asia.
NextEra Energy Inc. (NEE)
NextEra is working on the long-term trend of moving away from an economy based on fossil fuels. It’s the largest renewable energy firm in the world, and its size and portfolio diversity make it a reliable investment. With its background in solar and wind energy, it is well-positioned to capitalize on the Inflation Reduction Act's enticing financial incentives.
NRG Energy Inc. (NRG)
NRG stands out among utility stocks because of its promising future as well as its double earnings and sales growth rates. The Houston-based generation business encompasses both traditional fossil fuel power plants and other energy sources. Its retail division sells products and services to both large and small businesses. Within its corporate sector, the company also offers home solar and electric vehicle services.
Brookfield Infrastructure Partners (BIP)
Several utilities and utility-related industries are run by Brookfield Infrastructure, and they produce steady cash flow that increases over time. As the economy grows, the corporation gains from larger volumes, inflation-linked rate increases, and the opportunity to finish expansion projects. According to Brookfield, over time, these organic growth drivers can support dividend growth of 5% to 9% annually.
Edison International (EIX)
This California-based company plans to supply the entire state with carbon-free electricity by 2045. Rate base and dividend growth may improve as a result of investments in sustainable energy. Its Southern California Edison division is one of the largest electric companies in the United States. Edison Energy, a different division, is a global energy firm that primarily serves large businesses, government agencies, and other organizations.
Dominion Energy INC (D)
Located 27 miles off the coast of Virginia Beach, this Virginia firm is building the largest offshore wind farm in the US. Plus, the United States is planning to increase offshore wind throughout the eastern shoreline, freeing up space for additional development. That's not even all of Dominion's green power options! It also engages in the generation of electricity using solar, hydro, and biomass, which could lead to dividend increases over time.
Stocks in the utility industry are often a safe bet for long-term investors that prioritize safety and dividend growth. However, not all utility stocks are created equal. Therefore, it’s in the best interest of investors to zero in on the most reputable brands in the utility industry.
Above, we have listed the highest dividend utility stocks as of the time of this write-up. We’ve also listed the best utility stocks whose dividends show promise of increasing over time. With this, you have a better idea of the best utility stock that will yield more in the long run.
I/we have no positions in any asset mentioned, and no plans to initiate any positions for the next 7 days