5 Best Electric Utility Stocks To Buy Right Now

In this article, we discuss 5 best electric utility stocks to buy now. If you want to read our discussion on the electric utility industry, head over to 11 Best Electric Utility Stocks To Buy Right Now. 

5. The Southern Company (NYSE:SO)

Number of Hedge Fund Holders: 36

The Southern Company (NYSE:SO) specializes in the generation, transmission, and distribution of electricity. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects. The Southern Company (NYSE:SO) is one of the best utility stocks to monitor. On February 15, the company announced a Q4 non-GAAP EPS of $0.64, exceeding Street forecasts by $0.04. However, the revenue declined 14.2% year-over-year to $6.05 billion, falling short of market estimates by $1.32 billion. 

According to Insider Monkey’s fourth quarter database, 36 hedge funds were bullish on The Southern Company (NYSE:SO), compared to 35 funds in the prior quarter. Paul Marshall and Ian Wace’s Millennium Management is the leading position holder in the company, with 2 million shares valued at $162.8 million. 

4. Entergy Corporation (NYSE:ETR)

Number of Hedge Fund Holders: 36

Entergy Corporation (NYSE:ETR) is involved in the production and retail distribution of electricity in the United States. The company operates in two main segments: Utility and Entergy Wholesale Commodities. On January 26, Entergy Corporation (NYSE:ETR) declared a $1.13 per share quarterly dividend, in line with previous. The dividend is payable on March 1, to shareholders of record on February 9. 

According to Insider Monkey’s fourth quarter database, 36 hedge funds were long Entergy Corporation (NYSE:ETR), compared to 33 funds in the previous quarter. Steve Cohen’s Point72 Asset Management is a significant stakeholder of the company, with 1.6 million shares worth $166.2 million. 

3. Exelon Corporation (NASDAQ:EXC)

Number of Hedge Fund Holders: 37

Exelon Corporation (NASDAQ:EXC) operates in the energy distribution and transmission sectors in the United States and Canada. The company engages in the regulated retail sale of electricity and natural gas, as well as the transmission and distribution of electricity. Exelon ranks 3rd on our list of the best electric utility stocks. On January 10, Mizuho upgraded Exelon Corporation (NASDAQ:EXC) stock from Neutral to Buy, with a price target of $39, up from $36. This upgrade is attributed to Mizuho’s perception of conservative earnings and capital assumptions by Exelon, particularly in response to the negative decision made in Illinois last month.

According to Insider Monkey’s fourth quarter database, 37 hedge funds were long Exelon Corporation (NASDAQ:EXC), compared to 36 funds in the last quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the leading stakeholder of the company, with nearly 8 million shares worth $286 million. 

Here is what ClearBridge Investments Global Infrastructure Value Strategy has to say about Exelon Corporation (NASDAQ:EXC) in its Q1 2022 investor letter:

“U.S. electric utility Exelon (NASDAQ:EXC) was also a top contributor. Exelon is a pure transmission and distribution regulated utility business serving millions of electric and gas customers across Delaware, Illinois, Maryland, New Jersey, Pennsylvania and the District of Columbia. Shares outperformed along with the utilities sector; Exelon is also starting to be viewed as a premium name after its recently completed spin-off of power generation business Constellation Energy (NASDAQ:CEG).”

2. PG&E Corporation (NYSE:PCG)

Number of Hedge Fund Holders: 58

PG&E Corporation (NYSE:PCG), operating through its subsidiary Pacific Gas and Electric Company, is involved in the sale and delivery of electricity and natural gas to customers in California. The company employs nuclear, hydroelectric, fossil fuel-fired, fuel cell, and photovoltaic sources for electricity generation. PG&E Corporation (NYSE:PCG) is one of the best utility stocks to buy. On February 14, the company declared a $0.01 per share quarterly dividend, in line with previous. The dividend is payable on April 15, to shareholders on record as of March 28. 

According to Insider Monkey’s fourth quarter database, 58 hedge funds held stakes in PG&E Corporation (NYSE:PCG), compared to 49 funds in the last quarter. Dan Loeb’s Third Point is the largest stakeholder of the company, with 57.8 million shares worth over $1 billion. 

Third Point Management made the following comment about PG&E Corporation (NYSE:PCG) in its Q1 2023 investor letter:

“Our strategy is to preserve liquidity and buying power to take advantage of markets when they “break”. While overall indices remain elevated, we are finding more chances to provide liquidity across all three asset classes in which we invest – credit, structured credit, and equity – opportunities which have been key drivers of performance for the fund. Our portfolio is balanced across industries with a focus on event-driven names including companies involved in spin-offs, significant cost-cutting, or other types of under-appreciated business transformation. PG&E Corporation (NYSE:PCG), which is still our largest position, continues to deliver strong performance, down 50bps in the first quarter but up 6.2% for the year to date after the Fire Victims Trust sold another 60 million shares in a block trade.”

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

Number of Hedge Fund Holders: 65

NextEra Energy, Inc. (NYSE:NEE) is engaged in the generation, transmission, distribution, and sale of electric power to both retail and wholesale customers in North America. The company utilizes wind, solar, nuclear, natural gas, and other clean energy sources for electricity generation. NextEra Energy, Inc. (NYSE:NEE) ranks 1st on our list of the best utility stocks. On February 16, the company declared a $0.515 per share quarterly dividend, a 10.2% increase from its prior dividend of $0.468. The dividend is payable on March 15, to shareholders on record as of February 27. The board approved an updated dividend policy projecting a 10% annual growth rate in dividends per share through at least 2026, based on a 2024 starting point of $2.06 per share.

According to Insider Monkey’s fourth quarter database, 65 hedge funds were bullish on NextEra Energy, Inc. (NYSE:NEE), compared to 58 funds in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the leading stakeholder of the company, with 3.90 million shares worth $237.2 million.

ClearBridge All Cap Value Strategy made the following comment about NextEra Energy, Inc. (NYSE:NEE) in its Q3 2023 investor letter:

“Many businesses are threatened by a higher cost of capital, but one where reality has set in, and which also touches many other growth areas of the market, is the utility company NextEra Energy, Inc. (NYSE:NEE). Over the past few years, the company developed into a growth darling thanks to its strong track record in renewable energy development and tailwinds from the global energy transition and incentives in the Inflation Reduction Act. The problem for NextEra, and the transition broadly, is that this transformation is immensely capital intensive and many renewables projects offer lower returns on that capital. This requires high capital expenditures – often resulting in negative free cash flow – to meet the growth and financing needs of companies like NextEra. To help, the company leaned on financial engineering by using a publicly traded limited partnership called NextEra Energy Partners, providing further capacity for its parent to continue its development plans. NEP used layers of its own financial engineering to fund its own negative free cash flow and a large, growing dividend yield that we believe it could not sustain organically. Ultimately, the higher cost of debt from rising rates led NEP to lower its own growth ambitions, driving concerns about whether NextEra can execute on its extensive backlog. As a result, the stock has declined by approximately 30% year to date.”

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