The top utility stocks are what many of us think of first when we consider investments with minimal risk. That's because, in this day and age, power is just as essential as food and water. Before giving up on necessities like house heating or lighting, consumers are willing to make sacrifices in nearly every other area of discretionary spending.
The fact that state and federal governments regulate utilities so extensively also helps. Because of this, it's hard for new companies to enter the market and offer much lower prices, which would shake things up. In truth, the United States consists mainly of publicly traded regional monopolies.
After the turmoil of 2022, when the conflict in Ukraine and a series of unprecedented interest rate increases roiled credit markets, it is difficult for investors to predict what will happen in 2023.
But utility stocks are typically more stable than companies in other sectors, and their consistent revenue streams help to ensure that their dividends remain both generous and secure over the long term. Here are the best utility stocks to buy for dividends now for those seeking income or preferring a more stable investment.
1. AES Corp.
AES Corp. is a Virginia-based energy storage firm operating primarily in lithium-ion. Compared to the S&P 500's loss of 7.3% over the same period, its share price has increased by 24.2%. AES is poised for expansion as the energy storage market is expected to expand as governments and the utility sector worldwide work to combat climate change.
The energy company is doing well now, providing service to 15 countries, including the United States, the United Kingdom, Chile, Brazil, and Argentina. In a year when income and growth potential are portfolio anchors, AES's 2.6% dividend yield should pique investors' curiosity, and the company's $4 billion investment in a green hydrogen plant in Texas helps establish AES' global image as a pioneer in lithium storage.
2. Brookfield Renewable Partners
The portfolio of Brookfield Renewable Partners includes hydroelectric, wind and solar power-producing facilities worldwide. It's also international, with offices across the Americas, South America, Europe, Asia, and Oceania.
Remember that Brookfield is different from your typical utility provider, like the power company in your area. It generates electricity but then sells most of it to other utilities or major corporations through long-term contracts. Multi-year contracts with well-off clients help guarantee Brookfield a steady revenue stream to pay out hefty dividends.
In addition, its transition power generation, including nuclear energy, makes it an attractive option for business clients concerned with environmental impact. Other utility companies can also benefit from this if they decide to purchase from BEP rather than invest in wind or solar projects.
3. American Water Works Co. Inc.
Investors and analysts tend to overlook American Water Works Co. Inc. (AWK) Water, but this is a mistake from a growth perspective. After all, only 1% of the world's water is potable, and 66% of the world is expected to face a freshwater shortage by 2025, according to some estimates.
As such, this stable industrial water play, which serves over 14 million people across 24 U.S. states, has the propensity to keep portfolios afloat during turbulent economic times. Over the past year, AWK stock has risen by nearly 1%. The company's operating earnings per share of 81 cents in the fourth quarter exceeded the consensus EPS of 78 cents, and its dividend yield of 1.8% is substantial. Total revenue for the quarter also came in higher than expected, highlighting AWK's continued strength as an earnings powerhouse and dividend payer.
4. NextEra Energy Inc.
The most recent quarterly report for NextEra Energy Inc. (NEE), headquartered in Juno Beach, Florida, indicated a 54% growth in sales. The business is projected to invest up to $55 billion in green energy infrastructure in 2022. NextEra has had a poor start to the year, with its stock price down by around 10% since mid-January.
However, NextEra's net margin (19.8%) exceeds 85% of its industry peers in the first three weeks of February. Its return on equity (11.1%) exceeds 65% of its industry rivals in the same period. NEE is a solid choice for investors concerned with safety and dividends since it offers a competitive dividend yield of 2.3%.
5. Consolidated Edison
Consolidated Edison is the most excellent utility company with a long record of dividends. This dividend stock, which was originally issued in 1823 by the New York Gas Light Company, has a rich history of dividend distributions.
That's not just a rehash of old information. ConEd increased its dividend to shareholders in January for the 49th year in a row, the longest streak of any utility company in the S&P 500 Index.
The company's electric services provide around 3.5 million clients in New York City and the surrounding region with electricity, and its natural gas services offer about 1.1 million customers with natural gas.
