5 Best Utility Stocks To Buy Now

In this article, we discuss the 5 best utility stocks to buy now. If you prefer to read our detailed analysis of the utility sector, go directly to the 16 Best Utility Stocks To Buy Now.

5. Dominion Energy Inc (NYSE:D)

Market cap as of March 28: $45.74 Billion
Number of Hedge Fund Holders: 41

Dominion Energy Inc (NYSE:D), based in Richmond, Virginia, provides energy to 7 million customers in 13 states and employs over 17,000 people. Its key units include offshore wind, solar, and nuclear power. Dominion is committed to achieving net-zero carbon dioxide and methane emissions by 2050 and invests in renewable energy production facilities.

Dominion Energy Inc (NYSE:D) possesses around 30 gigawatts of electric generation capacity and more than 90,000 miles of electric transmission and distribution lines. In addition to that, it has ownership of an LNG export facility in Maryland, and it is in the process of building a 5.2 GW wind farm situated off the coast of Virginia.

Of the 943 hedge funds tracked by Insider Monkey, 41 funds reported owning stakes in Dominion Energy Inc (NYSE:D) in Q4 2022, compared with 29 in the preceding quarter. Among these hedge funds, Steve Cohen’s Point72 Asset Management is the company’s most notable stakeholder, with 3.81 million shares worth $233.5 million.

Carillon Tower Advisers made the following comment about Dominion Energy, Inc. (NYSE:D) in its Q4 2022 investor letter:

“Dominion Energy, Inc. (NYSE:D) traded lower following the surprise announcement of the company’s strategic review. The company is likely to sell several business units, which will impact future earnings. As a result of earnings uncertainty, we decided to sell the stock.”

4. AES Corporation (NYSE:AES)

Market cap as of March 28: $15.33 Billion
Number of Hedge Fund Holders: 44

AES Corporation (NYSE:AES) is a Virginia-based utility company with worldwide operations, including in South and Central America, the Caribbean, Europe, and Asia. Its power generation portfolio boasts almost 32,000 megawatts, enough energy to power up to 28 million homes.

Recently, AES Corporation (NYSE:AES) announced a partnership with Air Products and Chemicals to build a $4 billion hydrogen production facility in Texas, scheduled to begin operations by 2027. AES is also making strides toward becoming carbon-neutral as an electricity provider.

AES Corporation (NYSE:AES) is exceeded analysts’ expectations in Q4 earnings, reporting revenue of $3.06 billion, a more than 10% increase from the previous year and nearly double the expected $1.58 billion. Earnings per share of 49 cents also beat expectations by 3 cents.

AES Corporation (NYSE:AES) is a top dividend stock that has increased its dividend for 10 consecutive years. The company has seen a 24.2% rise in share price over the past 12 months, outperforming the S&P 500. AES also offers a 3.02% dividend yield as of March 28, making it an attractive choice for investors seeking both income and growth potential.

The AES Corporation (NYSE:AES) was a popular stock among hedge funds in the fourth quarter of 2022, as 44 funds tracked by Insider Monkey reported owning stakes in the company. The total value of these holdings is around $1.34 billion. With 17.94 million shares, Orbis Investment Management is the company’s notable stakeholder in Q4.

Massif Capital made the following comment about The AES Corporation (NYSE:AES) in their fourth quarter 2022 investor letter:

“We currently have roughly 13% of the portfolio allocated to two utilities: The AES Corporation (NYSE:AES) and Polaris (PIF). We invested in AES in December 2020 at an average entry price of $21.3 and invested in PIF in July 2020 at an average entry price of 16.36 CAD. We are currently underwater on PIF and making money in AES. Our near-term outlook for both positions is mixed. AES had a solid year in 2022, up 13%; it has telegraphed growth in earnings and cash flow through 2025 and seems to be hitting its targets. We will have to see what the year holds for utilities and AES, but another year like last year, and the firm will be touching our full value expectations.”

3. Constellation Energy Corporation (NASDAQ:CEG)

Market cap as of March 28: $24.80 Billion
Number of Hedge Fund Holders: 51

Constellation Energy Corporation (NASDAQ:CEG) is a company that offers natural gas, electricity, and power management services to residential and commercial customers. It was formed after being spun off from Exelon in 2022. The company is recognized as the top zero-carbon energy producer in the United States, providing carbon-free electricity to 10% of the country’s supply.

Moreover, Constellation Energy Corporation (NASDAQ:CEG) serves over 20 million households and 75% of the Fortune 100. The company has set ambitious goals of generating 95% carbon-free electricity by 2030 and 100% by 2040. It has a generating capacity of 32,355 MW through nuclear, wind, solar, natural gas, and hydroelectric assets. Constellation Energy Corp. serves a broad range of clients, including utilities, municipalities, cooperatives, and residential and commercial customers.

Constellation Energy Corporation (NASDAQ:CEG) has a low dividend yield of 1.52% compared to other utility stocks, but its shares have delivered a 32.56% return over the last 12 months. In addition, the company recently declared a quarterly dividend of $0.282 per share, which is a 100% increase from the previous dividend.

Credit Suisse downgraded Constellation Energy Corporation (NASDAQ:CEG) to ‘Neutral’ from ‘Outperform’ with a price objective of $83, down from $91.

51 hedge funds owned positions in the business at the end of the December quarter, according to Insider Monkey’s database, down from 54 in the preceding quarter. Constellation Energy Corporation (NASDAQ:CEG)’s largest shareholder was Orbis Investment Management at the end of Q4 2022, with 4.15 million shares.

In its Q3 2022 investor letter, Alger Capital stated the following regarding Constellation Energy Corporation (NASDAQ:CEG):

“Constellation Energy Corporation (NASDAQ:CEG) is America’s leading clean energy company, based on carbon-free production. The company is the largest supplier of clean energy and sustainable solutions to homes, businesses, governments, community aggregations, and a range of wholesale customers (such as municipalities, cooperatives, and other end markets) across the continental U.S., backed by approximately 32,400 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas and hydroelectric assets. Constellation produces nearly 10% of the nation’s carbon-free energy.

Shares outperformed during the third quarter primarily due to the Inflation Reduction Act (IRA). Signed into law in august, the bill provides a nuclear production tax credit of approximately $43.75 per megawatt hour of energy generated. This credit favorably impacted earnings, resulting in an increase in Constellation’s share price.”

2. PG&E Corporation (NYSE:PCG)

Market cap as of March 28: $36.08 Billion
Number of Hedge Fund Holders: 52

PG&E Corp. (NYSE:PCG) is a major US utility holding company whose primary subsidiary is Pacific Gas and Electric. The regulated utility operates in Central and Northern California, serving 5.3 million electricity and 4.6 million gas customers in 47 of the state’s 58 counties. After a bankruptcy court-supervised period from Jan. 2019 to June 2020, PG&E Corp. (NYSE:PCG) resumed operations.

PG&E Corp. (NYSE:PCG)’s 2022 electricity delivery comprised 40% from eligible-renewable resources, 49% from nuclear, and 7% from large hydroelectric power. The company supports California’s clean energy policies, renewable goals, and climate change efforts.

PG&E Corp. (NYSE:PCG) had a profitable 2022, with $1.8 billion in income available for common shareholders, or $0.84 per diluted share, compared to losses in 2021. The company updated its 2023 EPS guidance, with GAAP earnings expected to be between $0.98 and $1.13 per share. It also reaffirmed non-GAAP core earnings guidance of $1.19 to $1.23 per share.

In its Q4 2022 investor letter, ClearBridge Investments stated the following about PG&E Corporation (NYSE:PCG):

“Turning to the U.S. and Canada, U.S. electric utility PG&E Corporation (NYSE:PCG) and U.S. water company American Water Works (AWK) also made strong contributions. PG&E is a regulated utility operating in central and northern California that serves 5.3 million electricity customers and 4.4 million gas customers in 47 of the state’s 58 counties. PG&E outperformed given several positive catalysts: it was included in the S&P 500 Index, the Fire Victim’s Trust sold some of its stake in the company, easing a market overhang, and the company displayed evidence of its operational improvements, with no major fires seen so far this fire season.”

1. NextEra Energy, Inc. (NYSE:NEE)

Market cap as of March 28: $150.02 Billion
Number of Hedge Fund Holders: 61

NextEra Energy, Inc. (NYSE:NEE), based in Juno Beach, Florida, owns Florida Power & Light Company and NextEra Energy Resources, which are major players in the clean energy market. Florida Power & Light serves over 5.7 million customers and supports more than 11 million Florida residents. NextEra Energy Resources is the world’s largest generator of renewable energy from wind and solar, and a leader in battery storage.

NextEra Energy, Inc. (NYSE:NEE) is investing billions of dollars in expanding its clean energy business and eliminating carbon emissions from operations by 2045, aiming for EPS growth at or near the high end of its 6-8% annual target range through 2025, faster than peers in the sector.

Insider Monkey tracked 61 hedge funds with positions in NextEra Energy, Inc. (NYSE:NEE) in the fourth quarter, down from 73 in the previous quarter. NextEra Energy, Inc. (NYSE:NEE)’s largest shareholder is Adage Capital Management, with 2.02 million shares worth over $168.97 million.

ClearBridge Investments commented on NextEra Energy, Inc. (NYSE:NEE) in i ts Q3 2022 investor letter:

“NextEra Energy, Inc. (NYSE:NEE) is an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. NextEra’s regulated business includes Florida Power & Light, which serves nine million people in Florida. NextEra’s share price rose along with the passage of the U.S. Inflation Reduction Act, which considerably expands support for renewable energy.”

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