5 Best Utility Dividend Stocks To Buy

In this article, we discuss 5 best utility dividend stocks to buy. If you want to see more stocks in this selection, click 10 Best Utility Dividend Stocks To Buy. 

5. Dominion Energy, Inc. (NYSE:D)

Number of Hedge Fund Holders: 30

Dividend Yield as of October 28: 3.85%

Dominion Energy, Inc. (NYSE:D) is headquartered in Richmond, Virginia, and the company produces and distributes regulated electricity and natural gas to residential, commercial, industrial, and government customers in Virginia and North Carolina. On October 17, Dominion Energy, Inc. (NYSE:D) filed a proposal with the Virginia State Corporation Commission for approximately 24 new solar and energy storage projects for Virginia customers, which would offer over 800 MW of carbon-free electricity. 

Guggenheim analyst Shahriar Pourreza on October 24 maintained a Buy recommendation on Dominion Energy, Inc. (NYSE:D) but trimmed the price target on the shares to $75 from $90. The analyst reduced the baseline utility valuation, primarily supported by a sharp rise in interest rates and forward yield expectations.

According to the second quarter database of Insider Monkey, 30 hedge funds were long Dominion Energy, Inc. (NYSE:D), compared to 34 funds in the preceding quarter. Ric Dillon’s Diamond Hill Capital is the largest position holder in the company, with 3.3 million shares worth $262.85 million. 

4. Entergy Corporation (NYSE:ETR)

Number of Hedge Fund Holders: 30

Dividend Yield as of October 28: 3.75%

Entergy Corporation (NYSE:ETR) is a Louisiana-based company engaged in the production and retail distribution of electricity in the United States. The company operates through two segments – Utility and Entergy Wholesale Commodities. On October 28, Entergy Corporation (NYSE:ETR) declared a $1.07 per share quarterly dividend, a 5.9% increase from its last dividend of $1.01. The dividend was distributed on December 1, to shareholders of record on November 14. Entergy Corporation (NYSE:ETR)’s dividend yield on October 28 came in at 3.75% and it is one of the best dividend stocks to buy. 

Guggenheim analyst Shahriar Pourreza on October 24 reiterated a Buy rating on  Entergy Corporation (NYSE:ETR) and lowered the price target on the shares to $117 from $129. The analyst refreshed select estimates ahead of Q3 earnings season from the Power and Utilities group to factor in “known and measurable year-over-year items”.

According to Insider Monkey’s data, 30 hedge funds were bullish on Entergy Corporation (NYSE:ETR) at the end of Q2 2022, compared to 29 funds in the earlier quarter. Michael Gelband’s ExodusPoint Capital is the largest stakeholder of the company, with 1.2 million shares worth $137 million. 

3. Eversource Energy (NYSE:ES)

Number of Hedge Fund Holders: 32

Dividend Yield as of October 28: 3.32%

Eversource Energy (NYSE:ES) is a Massachusetts-based public utility holding company, engaged in the energy delivery business. The company operates through Electric Distribution, Electric Transmission, Natural Gas Distribution, and Water Distribution segments. Eversource Energy (NYSE:ES) distributed a $0.6375 per share quarterly dividend to shareholders on September 30. With a dividend yield of 3.32% as of October 28, Eversource Energy (NYSE:ES) is one of the best dividend stocks to invest in. 

On October 24, Guggenheim assigned a Buy rating to Eversource Energy (NYSE:ES) and lowered the firm’s price target on the shares to $82 from $97. Analyst Shahriar Pourreza issued the ratings update.

According to Insider Monkey’s Q2 data, 32 hedge funds were long Eversource Energy (NYSE:ES), with collective stakes worth $705.6 million, compared to 29 funds in the prior quarter worth $910.2 million. Stuart J. Zimmer’s Zimmer Partners is the biggest position holder in the company, with more than 2 million shares valued at $172.5 million. 

2. The AES Corporation (NYSE:AES)

Number of Hedge Fund Holders: 37

Dividend Yield as of October 28: 2.39%

The AES Corporation (NYSE:AES) is headquartered in Arlington, Virginia, operating as a diversified power generation and utility company. The company also owns and operates utilities to generate, purchase, transmit, and sell electricity to customers in the residential, commercial, industrial, and governmental sectors. On October 7, The AES Corporation (NYSE:AES) declared a quarterly dividend of $0.158 per share, in line with previous. The dividend is payable on November 15, to shareholders of record on November 1. The AES Corporation (NYSE:AES)’s dividend yield on October 28 stood at 2.39%. 

On August 18, Morgan Stanley analyst Stephen Byrd raised the price target on The AES Corporation (NYSE:AES) to $32 from $29.50 and kept an Overweight rating on the shares. The analyst lifted growth rates for solar, wind, energy storage, and clean hydrogen, and boosted price targets on many clean tech stocks, given the clean energy support from the new Inflation Reduction Act of 2022.

According to Insider Monkey’s data, 37 hedge funds were bullish on The AES Corporation (NYSE:AES) at the end of June 2022, with collective stakes worth $1.14 billion. William B. Gray’s Orbis Investment Management is the biggest position holder in the company, with 17.6 million shares valued at $369.5 million. 

Massif Capital made the following comment about The AES Corporation (NYSE:AES) in its Q3 2022 investor letter:

“Roughly 11% of the portfolio is allocated to U.S. utility The AES Corporation (NYSE:AES) and Canadian independent power producer Polaris Renewable Energy. Both positions have had modest performance this year. Polaris has been more volatile than is justified by the underlying business, putting in an all-time high this year at the beginning of August before tumbling 30.0%. AES has been far more stable and traded in a tighter range but is also down for the year by 5.4%, inclusive of reinvesting the dividends into treasury bills.

AES has continued to build its robust pipeline of energy projects and its strong backlog of signed power purchase agreements (PPAs). Currently, AES has 3.8 GW of renewables with signed PPAs under construction, 6.7 GW of signed PPAs for which building has yet to start, and a total development pipeline of 59 GW as of the start of 2022. Of note is that energy storage projects now make up 18% of that pipeline, with roughly 50% of PPA’s including some storage component.

AES continues to lag some of its peers on a multiple basis, which offers the opportunity for relative and absolute outperformance but raises questions about what the market may be concerned by. Solar supply chain issues are the best explanation for short-term underperformance, but on a two-year basis, AES trades at a roughly 30% discount to peers as measured by P/E and a 27% discount measured on an EV/EBIT basis. Balance sheet concerns may drive the discount, but AES has enjoyed several years of steady credit improvement and notched investment grade ratings across the board in the last 24 months. Still, forward-looking leverage levels remain elevated relative to peers. This may be the wedge keeping a lid on relative performance…” (Click here to read the full text)

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

Number of Hedge Fund Holders: 59

Dividend Yield as of October 28: 2.15%

NextEra Energy, Inc. (NYSE:NEE) is a Florida-based company that generates, distributes, and sells electric power to retail and wholesale customers in North America. On October 14, NextEra Energy, Inc. (NYSE:NEE) declared a $0.425 per share quarterly dividend, in line with previous. The dividend is payable on December 15, to shareholders of the company as of November 25. NextEra Energy, Inc. (NYSE:NEE)’s dividend yield on October 28 came in at 2.15%. The company also posted market-beating Q3 2022 financial results. It is one of the premier dividend stocks to invest in. 

On October 24, Guggenheim analyst Shahriar Pourreza reaffirmed a Buy on NextEra Energy, Inc. (NYSE:NEE) but lowered the firm’s price target on the stock to $99 from $108. 

Among the hedge funds tracked by Insider Monkey, NextEra Energy, Inc. (NYSE:NEE) was part of 59 public stock portfolios at the end of June 2022, compared to 64 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management is the largest position holder in the company, with 16.2 million shares worth $1.25 billion. 

In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and NextEra Energy, Inc. (NYSE:NEE) was one of them. Here is what the fund said:

“We increased our exposure to the energy transition during the quarter with new positions in Iberdrola (OTCPK:IBDSF), a Spanish-based integrated utility that is also one of the leading renewable energy developers in the world, and NextEra Energy, Inc. (NYSE:NEE), an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. The war has opened the eyes of the world that energy independence is critical. Renewables are for many countries the only way to get to the target. It is expected that existing renewable project pipelines will be executed faster, and more projects added to existing pipelines.

The energy transition would be extremely helpful for climate change and Iberdrola ranks well on our ESG matrix. NextEra, meanwhile, recently raised future earnings forecasts, citing a very favorable macro environment for rapid renewable generation expansion driven by decarbonization of the U.S. economy and the relative attractiveness of renewable generation in the context of high natural gas and power prices.”

You can also take a look at 10 Best Medical Stocks Under $5 and 10 Best Pharma Dividend Stocks To Invest In. 

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