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Companies in the Utilities sector are often common targets of investors when thinking of dividend-paying stocks.
In addition, stocks from the sector are often highly-defensive in nature, thanks to their advantageous ability to generate revenue in the face of many economic backdrops.
Combining this lower-risk approach with a steady income stream makes it much easier to understand why so many enjoy parking their cash in the sector.
Three top-ranked stocks from the Zacks Utilities sector – NextEra Energy (NEE - Free Report) , NRG Energy (NRG - Free Report) , and Global Water Resources (GWRS - Free Report) – could all be considerations for investors looking to add an additional layer of defense into their portfolios and reap a steady income stream.
Below is a chart illustrating the performance of all three stocks over the last year, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a closer look at each one.
NextEra Energy
NextEra Energy is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy. The company sports a Zacks Rank #2 (Buy).
A significant positive, NEE is a part of the elite Dividend Aristocrat club. Dividend Aristocrats have consistently paid and increased their dividends for a minimum of 25 consecutive years, putting their well-established and successful business natures on full display.
NEE’s annual dividend currently yields 2%, below its Zacks sector average by a fair margin. Still, the company’s 10% five-year annualized dividend growth rate bridges the gap.
Image Source: Zacks Investment Research
NextEra is no stranger to consistent growth; the Zacks Consensus EPS Estimate of $2.89 for its current fiscal year (FY22) suggests an improvement of 13% Y/Y. And in FY23, estimates allude to a further 8% of growth.
Image Source: Zacks Investment Research
NRG Energy
NRG Energy generates electricity and provides energy solutions and natural gas to millions of customers through its diverse portfolio of retail brands. Currently, NRG sports the highly-coveted Zacks Rank #1 (Strong Buy).
NRG’s annual dividend yield stands tall at 4.3%, nicely above its Zacks sector average. Impressively, the company’s payout has grown by more than 100% over the last five years.
Image Source: Zacks Investment Research
Global Water Resources
Global Water Resources is a water resource management company that owns and operates regulated water, wastewater, and recycled water utilities.
Like the stocks above, the company has seen its earnings outlook drift higher over the last several months, landing the stock into a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
The company has been on an impressive earnings streak, exceeding earnings and revenue estimates in four consecutive quarters. Just in its latest release, GWRS surpassed the Zacks Consensus EPS Estimate by a sizable 40% and reported revenue 1.6% above expectations.
Additionally, it’s worth highlighting that all four of its last EPS beats have been by double-digit percentages.
Image Source: Zacks Investment Research
Bottom Line
Stocks in the Zacks Utilities sector are defensive by nature, as these companies’ services witness consistent demand no matter the economic backdrop.
In addition, they commonly reward their investors handsomely, providing a nice cushion to the impact of drawdowns in other positions.
For those seeking stocks that provide an income stream paired with favorable earnings outlooks, all three stocks above – NextEra Energy (NEE - Free Report) , NRG Energy (NRG - Free Report) , and Global Water Resources (GWRS - Free Report) – deserve consideration.
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3 Top Utilities Stocks For a Defensive Approach
Companies in the Utilities sector are often common targets of investors when thinking of dividend-paying stocks.
In addition, stocks from the sector are often highly-defensive in nature, thanks to their advantageous ability to generate revenue in the face of many economic backdrops.
Combining this lower-risk approach with a steady income stream makes it much easier to understand why so many enjoy parking their cash in the sector.
Three top-ranked stocks from the Zacks Utilities sector – NextEra Energy (NEE - Free Report) , NRG Energy (NRG - Free Report) , and Global Water Resources (GWRS - Free Report) – could all be considerations for investors looking to add an additional layer of defense into their portfolios and reap a steady income stream.
Below is a chart illustrating the performance of all three stocks over the last year, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a closer look at each one.
NextEra Energy
NextEra Energy is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy. The company sports a Zacks Rank #2 (Buy).
A significant positive, NEE is a part of the elite Dividend Aristocrat club. Dividend Aristocrats have consistently paid and increased their dividends for a minimum of 25 consecutive years, putting their well-established and successful business natures on full display.
NEE’s annual dividend currently yields 2%, below its Zacks sector average by a fair margin. Still, the company’s 10% five-year annualized dividend growth rate bridges the gap.
Image Source: Zacks Investment Research
NextEra is no stranger to consistent growth; the Zacks Consensus EPS Estimate of $2.89 for its current fiscal year (FY22) suggests an improvement of 13% Y/Y. And in FY23, estimates allude to a further 8% of growth.
Image Source: Zacks Investment Research
NRG Energy
NRG Energy generates electricity and provides energy solutions and natural gas to millions of customers through its diverse portfolio of retail brands. Currently, NRG sports the highly-coveted Zacks Rank #1 (Strong Buy).
NRG’s annual dividend yield stands tall at 4.3%, nicely above its Zacks sector average. Impressively, the company’s payout has grown by more than 100% over the last five years.
Image Source: Zacks Investment Research
Global Water Resources
Global Water Resources is a water resource management company that owns and operates regulated water, wastewater, and recycled water utilities.
Like the stocks above, the company has seen its earnings outlook drift higher over the last several months, landing the stock into a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
The company has been on an impressive earnings streak, exceeding earnings and revenue estimates in four consecutive quarters. Just in its latest release, GWRS surpassed the Zacks Consensus EPS Estimate by a sizable 40% and reported revenue 1.6% above expectations.
Additionally, it’s worth highlighting that all four of its last EPS beats have been by double-digit percentages.
Image Source: Zacks Investment Research
Bottom Line
Stocks in the Zacks Utilities sector are defensive by nature, as these companies’ services witness consistent demand no matter the economic backdrop.
In addition, they commonly reward their investors handsomely, providing a nice cushion to the impact of drawdowns in other positions.
For those seeking stocks that provide an income stream paired with favorable earnings outlooks, all three stocks above – NextEra Energy (NEE - Free Report) , NRG Energy (NRG - Free Report) , and Global Water Resources (GWRS - Free Report) – deserve consideration.