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. It is crucial to research these stocks before you invest and make sure that you choose the right company.
Dominion Energy
Dominion Energy may be the right choice for you if your goal is to find a high-yielding utility that also provides steady income. The stock is up nearly 12% over the trailing year and offers a 3.3% dividend yield. This yield is lower than the average utility sector yield of 3.75%. This company is reliable, and the dividend is likely to grow over the long run.
Dominion Energy forecasts a 14% revenue increase during the current financial year. 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. Fremont expects that the stock will grow faster than the rest of its industry. He projects a 13.4% FFO/debt ratio in 2024. The company has a positive outlook for 2022 due to a lack of regulatory oversight.
The company's vast size and geographic diversification provide investors with plenty of opportunity for growth in an uncertain market. The company is also known for its dividend growth history and plans to continue spinning off companies it has acquired. This strategy should allow it to grow significantly in 2022 and beyond. UGI Corporation supplies natural gas and propane to businesses. It has a strong dividend payout of 3.1% and a valuation in excess of $8.8billion. Otter Tail Corporation (a utility stock) is also well-positioned for future expansion. This company has exposure in electricity distribution and PVC pipes manufacturing. It also operates a parts stamping and manufacturing company.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners is a global infrastructure firm that owns and operate assets in the data, energy, transport and midstream 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 has interests in data centers, water heaters, and rail operations.
Investors will benefit from the steady growth of Brookfield Infrastructure Partners' operations. This company is a solid investment and has been comfortable with its dividend payments. It still benefits from previous infrastructure investments.
American States Water
American States Water is one of the best utility companies to invest in, with a remarkably long track record of dividend hikes. It has been increasing its dividend over the past 68 year, making it one of most reliable dividend stocks. The company's management expects dividend growth of 7 to 10% annually through the year 2026. Its cash flow has been extremely steady which makes it a good dividend stock. Water utilities are generally more conservative than gas utilities because the demand for their services tends to be less stable than that of gas.
American States Water supplies clean water and electricity in Southern California. It has long-term contracts signed with the U.S government, which includes 11 military bases. This business model is a diversified one that provides the company with growth and recurring revenue. It is important that the company diversifies away from its dependence on one country, which is crucial for long-term success.