We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Utility Stocks to Buy for Defensive Safety Amid Heightened Market Volatility
Read MoreHide Full Article
Markets continued to fall today as Friday’s jobs report showed the US labor force continued to cool while the unemployment rate rose to 4.3%, its highest peak since 2021.
Also extending this week’s selloff was underwhelming Q3 guidance from several big tech firms. However, the utility sector may be one to consider amid heightened market volatility and the potential resurgence of broader economic fears.
That said, here are three top utility stocks that have essential services and generous dividends to support investors.
We’ll start with American Electric Power which is one of the largest integrated utility providers in the US. AEP provides electricity, natural gas, and other commodities to over 5.6 million customers.
Along with its steady top and bottom line growth, AEP offers a 3.48% annual dividend yield and trades at a reasonable 18.1X forward earning multiple.
Operating on a smaller scale, Evergy is still worthy of investors' consideration as the largest electricity provider in Kansas and Missouri with more than 1.7 million customers.
Evergy’s increased probability is intriguing as earnings per share is expected to spike 8% this year with fiscal 2025 EPS projected to increase another 5% to $4.04. Plus, EVRG stands out in terms of valuation at 15.5X forward earnings which is a nice discount to the S&P 500’s 22.9X and slightly beneath the Zacks Utility-Electric Power Industry average of 15.9X.
More enticing, Evergy’s 4.3% annual dividend yield impressively tops its industry average of 3.43% and the S&P 500’s 1.28% average.
Last but not least is Exelon which provides power to over 10 million customers throughout the US with a few of its noteworthy subsidiaries being ComEd and Pepco.
Like American Electric Power, Exelon’s robust top line is steadily expanding with sales projections over $20 billion. Furthermore, as a leading utility company, Exelon’s valuation is very reasonable at 15.7X forward earnings with EPS expected to increase 2% in FY24 and projected to rise another 7% next year to $2.61 per share.
Exelon also trades at 1.7X sales compared to the Zacks Utility-Electric Power P/S ratio of 2.8X and the S&P 500’s 4.6X. The cherry on top is that Exelon's dividend is currently at 3.97%.
Image Source: Zacks Investment Research
Bottom Line
At the moment, these utility stocks all sport a Zacks Rank #2 (Buy). With utility stocks generally being less volatile due to their essential services now may be an ideal time to invest in American Electric Power, Evergy, and Exelon given their attractive valuations and generous dividends.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Utility Stocks to Buy for Defensive Safety Amid Heightened Market Volatility
Markets continued to fall today as Friday’s jobs report showed the US labor force continued to cool while the unemployment rate rose to 4.3%, its highest peak since 2021.
Also extending this week’s selloff was underwhelming Q3 guidance from several big tech firms. However, the utility sector may be one to consider amid heightened market volatility and the potential resurgence of broader economic fears.
That said, here are three top utility stocks that have essential services and generous dividends to support investors.
Image Source: Federal Reserve Economic Data
American Electric Power (AEP - Free Report)
We’ll start with American Electric Power which is one of the largest integrated utility providers in the US. AEP provides electricity, natural gas, and other commodities to over 5.6 million customers.
Along with its steady top and bottom line growth, AEP offers a 3.48% annual dividend yield and trades at a reasonable 18.1X forward earning multiple.
Image Source: Zacks Investment Research
Evergy (EVRG - Free Report)
Operating on a smaller scale, Evergy is still worthy of investors' consideration as the largest electricity provider in Kansas and Missouri with more than 1.7 million customers.
Evergy’s increased probability is intriguing as earnings per share is expected to spike 8% this year with fiscal 2025 EPS projected to increase another 5% to $4.04. Plus, EVRG stands out in terms of valuation at 15.5X forward earnings which is a nice discount to the S&P 500’s 22.9X and slightly beneath the Zacks Utility-Electric Power Industry average of 15.9X.
More enticing, Evergy’s 4.3% annual dividend yield impressively tops its industry average of 3.43% and the S&P 500’s 1.28% average.
Image Source: Zacks Investment Research
Exelon (EXC - Free Report)
Last but not least is Exelon which provides power to over 10 million customers throughout the US with a few of its noteworthy subsidiaries being ComEd and Pepco.
Like American Electric Power, Exelon’s robust top line is steadily expanding with sales projections over $20 billion. Furthermore, as a leading utility company, Exelon’s valuation is very reasonable at 15.7X forward earnings with EPS expected to increase 2% in FY24 and projected to rise another 7% next year to $2.61 per share.
Exelon also trades at 1.7X sales compared to the Zacks Utility-Electric Power P/S ratio of 2.8X and the S&P 500’s 4.6X. The cherry on top is that Exelon's dividend is currently at 3.97%.
Image Source: Zacks Investment Research
Bottom Line
At the moment, these utility stocks all sport a Zacks Rank #2 (Buy). With utility stocks generally being less volatile due to their essential services now may be an ideal time to invest in American Electric Power, Evergy, and Exelon given their attractive valuations and generous dividends.