With all the stock market’s volatility, few sectors have been as impacted by rate hikes, inflation and economic turbulence as utility stocks. Share prices across the industry dropped in 2022 and 2023, pumping slightly at the end of last year but not enough to offset investor losses. In fact, the only thing keeping utility stock investors happy is dividend yields, which tended to stay steady for the strongest utility stocks on the market.
The best utility stocks, to that end, blend three factors: quality financial management to navigate today’s landscape, diversified operations and, in the best cases, forward-looking sustainability initiatives to adapt to regulatory changes and consumer expectations. These top utility stocks to buy meet the mark on all accounts, making them the best picks to bet on a sector-wide rebound in 2024.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) is one of those top utility stocks to buy that boasts strong performance today alongside compelling opportunities for tomorrow. The wide-ranging utility stock operates Florida Power & Light and has a significant stake in wind and solar energy production, including selling renewably generated power to competing utility firms.
NextEra’s end-of-year highlights for 2023 are commendable. The company posted an annual $3.17 earnings per share (EPS), up nearly 10% from 2022, while marking a 13% adjusted earnings growth. NextEra also had a record year within its energy transmission wing, a segment that brings renewable energy nationwide to improve our energy grid.
NextEra Energy also boasts two core utility stock criteria: high institutional ownership and a decent dividend yield. Institutional investors own more than 80% of all NEE shares, meaning the “smart money” is backing the joint utility stock/renewable energy play. Its current dividend yield is 3.4%, marking nearly 10 years’ worth of dividend distribution growth.
Evergy (EVRG)
Evergy (NASDAQ:EVRG), like NextEra, is a promising top utility stock operating within the wider sustainability sector. As a leading utility provider in Kansas and Missouri, Evergy ranks as the nation’s second-largest wind energy producer. The company recently announced a 5% increase in its quarterly dividend to 64.25 cents per share, offering a forward yield of 5% to investors passionate about green energy. Despite wider struggles across utilities and sustainable solutions, Evergy’s dominant position and dividend growth position it as an attractive option for income-oriented investors.
After resolving a rate adjustment dispute with Kansas regulators last November, Evergy is poised for a turnaround, aiming to reinforce its competitive edge. This comes on the heels of a disappointing earnings report that slightly missed analyst expectations for revenue while missing earnings targets by a wider margin. The market didn’t react strongly to the news, though. That reinforces the utility stock’s strength long-term, even if short-term fluctuations present challenges.
Eversource Energy (ES)
Eversource Energy (NYSE:ES), serving customers in Connecticut, Massachusetts and New Hampshire, is having a tough year as shares fell 20% over the past 12 months. Despite this, the utility provider’s varied portfolio across electricity, water and natural gas shields it from the volatility of specific commodity markets. Analysts are bullish about its prospects, forecasting a 30% potential increase in stock value.
The company’s strategic approach and diverse operations set the stage for a rebound and sustained growth amid the shifting landscape of the energy sector. Despite the recent downturn reflecting immediate challenges, Eversource’s strong earnings, attractive dividend yield at 4.6% and strategic operational sales point to a promising direction within its industry.
For those considering an investment in Eversource Energy, factors such as its strong regional footprint, the appeal of its dividends and positive analyst outlook are worth noting. The company’s role as a key energy supplier, coupled with its adaptive market strategies, positions it as a compelling choice for investors looking for stability and growth potential in the utility market.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.