8. Evergy Inc. (NYSE:EVRG)
Number of Hedge Fund Investors: 36
Evergy Inc. (NYSE:EVRG) is a leading energy company committed to providing reliable and sustainable power solutions. The recent passage of House Bill 2527 in Kansas sets up a competitive framework for electric infrastructure, helping to address regulatory delays and promote economic development. This legislative support signals a positive environment for Evergy Inc. (NYSE:EVRG).
In Missouri, Evergy Inc. (NYSE:EVRG) will likely benefit from lower fuel and power costs, which should lower customer rates and strengthen its market position through favorable rate changes and regulatory collaboration. Additionally, Evergy Inc. (NYSE:EVRG)’s focus on affordability, reliability, and sustainability enhances its growth potential. Evergy Inc. (NYSE:EVRG)’s efforts to keep rates competitive and its significant reduction in carbon emissions by 53% since 2005 showcase its commitment to long-term value and environmental responsibility.
Jim Cramer suggests Evergy Inc. (NYSE:EVRG) as a top utility stock to consider. While Dominion Energy has the highest yield among S&P 500 utilities, Cramer has concerns about its dividend. Instead, Evergy Inc. (NYSE:EVRG), which has a 4.34% yield, is recommended due to its promising future.
“Let’s look at a utility stock that can serve as a safety net if the Fed’s rate cuts fail to boost the economy. Even if the economy improves, utilities are set to benefit from the insane demand for electricity driven by the construction of data centers for AI workloads. Many high-quality utilities have yields that aren’t quite high enough to make this list, but we want stocks with yields higher than the 10-year Treasury.
Dominion Energy (NYSE:D) has the highest yield among utilities in the S&P 500, but I’m not confident in their dividend due to some ongoing issues. Instead, I recommend Evergy, the second-highest yielding utility in the S&P 500, with a 4.34% yield. Evergy, based in Kansas City, was formed by the merger of Great Plains Energy and Westar Energy in 2018. Although the stock has mostly traded sideways since the merger, there’s a new angle to the story that hasn’t yet been reflected in the stock price.
Evergy’s service area has announced three major projects that will eventually consume massive amounts of electricity: a $4 billion electric vehicle battery plant from Panasonic, the largest in the world when fully operational in 2026; an $800 million data center from Meta, expected to be fully online by 2027; and a billion-dollar data center from Google, expected to be online by 2028. Combined, these projects represent a staggering 750 megawatts of load. This is exactly what you want to see in a utility stock—a solid yield and potential for load growth.”
Artisan Value Income Fund stated the following regarding Evergy, Inc. (NASDAQ:EVRG) in its first quarter 2024 investor letter:
“In Q1, we added two utilities to the portfolio: Alliant Energy and Evergy, Inc. (NASDAQ:EVRG). Evergy serves more than 1.7 million customers in Kansas and Missouri. In addition to the aforementioned dynamics weighing on utilities share prices, Evergy had two key rate cases in 2023, one in Kansas and the other in Missouri, that presented risk for investors. The Missouri case went better than expected, but the returns allowed by the Kansas regulator were punishingly low. Though Evergy operates in a subpar regulatory environment, the utility is a good operator, with strong customer satisfaction scores, below-average capex needs and a clean balance sheet. The regulatory environment may improve at some point, but even if it does not, Evergy trades for just 13X 2024 earnings, which is below average relative to its history and peers— and pays a dividend yielding 4.7%.”
