September Rally? 3 Utilities Stocks to Buy Before Liftoff

Muslim Farooque

Sat, Sep 9, 2023, 12:00 AM 3 min read

Investing in the best utility stocks might emerge as a remarkably steady choice in a constantly evolving market environment. Undeniably, utilities are the unsung maestros, orchestrating a seamless flow of electricity, natural gas, and water to our homes. Sheltered beneath the steadfast umbrella of regulatory guidelines, they’ve proven to be remarkably reliable investments over the years.

However, with the looming specter of the Fed’s intense monetary tightening, an undeniable atmosphere of unease runs throughout the market. While tumult may not be imminent, investors are wise to fortify their portfolios. For the prudent, though, utility stocks emerge as a sanctuary. They might not dazzle with the spectacular returns of some growth stocks, but they steadfastly hold the line.

Moreover, think of utility stocks as steady undercurrents. When markets whirl, and economies waver, they remain a reliable refuge, offering consistency and resilience to weather any storm.

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Duke Energy (DUK)

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In the evolving realm of utility stocks, Duke Energy (NYSE:DUK) shines as a beacon of consistency.

Nestled in the Carolinas, where the cost of living strikes a harmonious balance, Duke leverages geographical and economic perks, serving its vast clientele. This public utility powerhouse boasts a natural monopoly, making it irresistibly appealing for long-term investors.

Yet, recent financial results reveal an earnings miss for Duke. However, with revenues touching an impressive $6.58 billion in the second quarter, outstripping expectations by an astounding $20 million, the situation isn’t all murky. Additionally, the reaffirmed earnings-per-share forecast for 2023, projects a steady growth of 5% to 7% for the next few years. Its dividend yield of a spectacular 4.5% paints a bright horizon for the company.

Furthermore, its recent launch of an EV charging subscription service in North Carolina underscores its forward-thinking approach. Coupled with a forward prediction of a 17% upside by TipRanks, Duke Energy exemplifies endurance and promises investors a fortified portfolio corner.

Southern Company (SO)

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Southern Company (NYSE:SO) enters the utility landscape as a clear stalwart. Headquartered in bustling Atlanta, Georgia, this gas and electric behemoth operates under the invaluable umbrella of a natural monopoly. With a whopping nine million customers under its belt, challenging this titan appears to be a distant dream for would-be competitors.

As investors patiently await the winds to shift, Southern Company cushions them with a forward yield of 4.13%. Additionally, it has raised its payouts for 21 consecutive years, with 33 years of consistent payments. This offering surpasses the utility sector’s average yield and hints at Southern’s commitment to shareholder value.

Moreover, they boast an impressive EBITDA of 36.7%. This, combined with net income and return on common equity at 11.2% and 10.4%, respectively, illuminates Southern’s masterful blend of financial prowess and dedication to shareholders. It’s not just about dominance. Southern provides a resounding promise to shareholder value.

NextEra Energy (NEE)

Nextra Energy (NEE) website on a mobile phone screen

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Blazing a trail in the utility sector is NextEra Energy (NYSE:NEE), a fusion of traditional power utility and pioneering green energy.

On one hand, we witness the reliability of Florida Power & Light, America’s largest electric utility. On the other, there’s the avant-garde spirit of NextEra Energy Resources, a global leader in wind and solar energy generation.

Moreover, diving into the numbers, the figures are nothing short of remarkable. The second quarter alone showcased a staggering profit of $2.795 billion. Furthermore, its collaborative ventures with CF Industries Holdings (NYSE:CF) underscore its dedication toward expansion and push for a greener tomorrow. Furthermore, with a dividend growth streak spanning more than twenty years, TipRanks analysts forecast a robust buy with a 29.4 percent ascent. NextEra stands as a testament to innovation blended with consistent performance.

On the date of publication, Muslim Farooque 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

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.