Utility stocks can be a low-risk way to make income from dividends. These companies have a solid foundation and excellent operational capabilities. Moreover, the demand for utilities will never dry up. However, before investing in these stocks, it is important to do your research well and choose the right company.
Dominion Energy
Dominion Energy is a high-yielding utility company that can provide a steady income. The stock has seen a nearly 12% increase over the previous year, with a 3.3% dividend rate. This yield is less than the average utility sector yield, which is 3.75%. The dividend will likely grow over time as the company is reliable.
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 be used to help the company adapt to changing climate and emission trends.
Exelon Corporation
Paul Fremont, Mizuho analyst, has increased his price target for Exelon Corporation from $32 to $46. The stock is expected to grow faster than other stocks in the sector. He forecasts a 13.4% ratio FFO/debt in 2024. The company is in a good position going into 2022 with a light regulatory calendar.
The company's huge size and geographic diversification offer investors ample opportunity to grow in an uncertain energy market. Additionally, the company has a long history of dividend growth and plans to spin off its previously acquired companies. This strategy will allow the company to grow substantially in 2022 and beyond. UGI Corporation is another top utility stock. It supplies natural gas, propane, and electricity to businesses. It boasts a 3.1% dividend yield and a valuation of $8.8 billion. Otter Tail Corporation is another utility stock poised for growth. This utility stock has exposure to PVC pipe and electricity distribution. It also has a business in parts stamping and manufacturing.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners (BIP), is a global infrastructure business that owns or operates assets in energy, transport, midstream, data and other sectors. The company owns and operates 61,000 km of electricity transmission lines, 4,200 km of natural gas pipelines, and 7.3 million connections to electricity and gas networks. It also owns interests in rail operations, water heaters, data centers, and rail operations.
Investors will be able to benefit from Brookfield Infrastructure Partners’ continued growth. The company is known for making solid investments and is happy with its dividend payments. It still benefits from previous infrastructure investments.
American States Water
American States Water is one the most reliable utility companies, boasting a remarkable track record of dividend increases. It has been increasing its dividend over the past 68 year, making it one of most reliable dividend stocks. The company's management projects a dividend increase of 7-10% per annum through 2026. Its cash flow, which has been very steady, makes it an excellent dividend stock. Water utilities are often more conservative investments that gas utilities due to the fact that their services are in high demand and more stable.
American States Water provides clean water and electricity to Southern California and has long-term contracts with the U.S. government, including 11 military bases. This diversification of business models provides the company with both recurring revenues and growth opportunities. This diversification is essential for long-term development.