NEE - 3 Top Utility Stocks to Buy in December
2023-12-07 05:02:00 ET
Utilities are generally considered income stocks, so rising interest rates have been a headwind as they make other income options (like CDs) more attractive. If you are a long-term investor, however, this could be an opportunity to add some well-positioned utilities to your portfolio. Three that are worth considering this December are Duke Energy (NYSE: DUK) , NextEra Energy (NYSE: NEE) , and Black Hills (NYSE: BKH) . Here's why.
Duke Energy is one of the largest regulated electric and natural gas utilities in the U.S., with a market cap of around $70 billion. It recently sold a contract renewable power business, which has left it with only regulated operations. This is a case of a utility getting even more boring, since regulated utilities have monopolies in the regions they serve but have to get capital investment plans and rates approved by the government. That generally results in slow but steady growth over time.
Today, Duke Energy has a capital investment budget of roughly $65 billion dollars. That money will be spent on things like new capacity and asset improvements (storm hardening, for example) over the next five years. This backs management's belief that it can provide earnings growth of between 5% and 7% a year through at least 2027. That, in turn, should support annual dividend increases that will extend the current 19-year annual dividend increase streak well into the future. With a dividend yield of 4.3%, even conservative dividend investors will probably want to dig into this story.
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3 Top Utility Stocks to Buy in December