The stock rally is largely fueled by optimism about a more business-friendly environment. This includes reducing regulations that limit business growth. This has many investors looking at small-cap stocks, but another area investors should pay attention to is utility stocks.
Utility companies are clearly suffering from the rising costs of complying with federal, state and local regulations. This is partly due to the transition to zero-emission renewable energy sources.
The transition to renewable energy shows no sign of stopping. However, the next four years will bring a more pragmatic approach to the country’s energy policy, leaning towards a “all of the above” approach.
However, making this transition will require capital, and these companies will rely on a stable regulatory framework to ensure a predictable revenue stream and sustainable profit growth.
This combination, along with its high-yielding dividends, makes this utility stock one of the best options for investors in 2025 and beyond.
A large backlog of orders will contribute to the growth of this enterprise
Evergy today
(As of 5:34 p.m. ET)
- 52 week range
- $48.04
▼
$65.47
- Dividend yield
- 4.24%
- P/E ratio
- 17.02
- Target price
- $61.88
Evergy Inc. NASDAQ: EURG affects almost all areas of the energy sector. The company produces electricity for its commercial, residential and municipal customers in Kansas and Missouri using coal, landfill gas (such as methane), uranium, natural gas, solar, wind and other renewable sources. If you’re looking for a company that embodies all of the above, you can find it here.
But does this jack-of-all-trades approach make stocks a good investment? If you look at the company’s projected earnings growth of 4-6% through 2029, the answer is yes. A key reason for this revenue growth is the company’s backlog of projects, including two new data centers for Alphabet Inc. NASDAQ: GOOGLE And Meta Platforms Inc. NASDAQ: META. In addition, the company will provide electricity Panasonic Holdings Corp. OTsMKTS: PKRFY for a plant producing batteries for electric vehicles.
In addition to the potential share price appreciation that fuels earnings growth, investors enjoy a dividend yield of 4.19%, which the company has increased for 20 straight years. Over the past three years, the payout ratio of 6.55% has more than doubled the rate of inflation.
This utility allows you to invest in dividend royalties
Duke Energy today
(As of 12/06/2024 ET)
- 52 week range
- $90.09
▼
$121.25
- Dividend yield
- 3.73%
- P/E ratio
- 20.60
- Target price
- $121.69
As with many things when it comes to utility stocks, location matters. This is true for Duke Energy Corp. New York Stock Exchange: DUK. Duke, based in Charlotte, North Carolina, supplies electricity and natural gas to nearly 10 million customers in the southeastern United States.
Duke is benefiting from a tailwind from population migration into its service areas. The company also worked actively with South Carolina and Florida to obtain regulatory agreements that provide revenue and profit predictability and support the company’s forecast for earnings growth of 5% to 7% through 2028. And like many other utilities, DUK stock offers investors a high-yield dividend, currently yielding 3.68% and rising for the last 20 years in a row.
Duke Energy shares are up about 17% in 2024 as of Dec. 5, 2024. It met resistance at its 52-week high of around $121, which is close to the consensus price target of analysts, who continue to offer a moderate buy rating on DUK shares. .
Major capital investment plans backed by a strong balance sheet
WEC Energy Group today
Energy Group VEC
(As of 12/06/2024 ET)
- 52 week range
- $75.13
▼
$102.79
- Dividend yield
- 3.44%
- P/E ratio
- 23.74
- Target price
- $95.55
WEC Energy Group Inc. (NYSE:WEC) operates in the upper Midwest, with its largest presence in Wisconsin and Illinois. The stock has performed well in 2024, rising 16.8%. However, there is likely to be even greater growth in the future.
The company recently increased its five-year capital expenditure plan by $4.3 billion, covering the period from 2025 to 2029. Much of this spending is centered on the company’s commitment to phase out coal as an energy source by 2032.
Utility companies need strong balance sheets to implement such plans. Fortunately, this is the case with WEC Energy. The company has regulatory agreements with the governments of Wisconsin and Illinois, supporting its forecast for compound annual earnings per share (EPS) growth of 6.5% to 7% from 2025 to 2029.
It is expected that one of the drivers of this business will be Microsoft Corporation NASDAQ: MSFT which announced a $3.3 billion investment in a data center in Wisconsin to meet demand for artificial intelligence.
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