Top 10 Electric Utility Dividend Stocks to Buy

Published on May 19, 2021 at 10:39 am by Ma’k Almario in Hedge Funds, News

In this article, we will take a look at the top 10 electric utility dividend stocks to buy. You can skip our comprehensive analysis of these stocks and go directly to the Top 5 Electric Utility Dividend Stocks to Buy.

The COVID-19 outbreak has taken a toll on many industries worldwide resulting in an economic downfall. However, the electric utility industry was able to stay afloat amidst the pandemic. The demand for these services will continue to increase given its recession-resilient and essential nature in providing power to customers worldwide. According to a study from Statista, from 7,323 terawatt-hours in 1980, the global energy demand increased to more than 22,000 terawatt-hours in 2019. Electricity demand is forecast to continue to rise over the next few decades, exceeding 35,000 terawatt-hours by 2040.

According to an article from consulting firm Mckinsey, electricity is rising at a higher rate than any other energy source, with value pools increasing at a rate of 4% each year, or $287 billion, in the decade to 2025.

Electric Utility Trends Under the Biden Administration

Dividend investing has become extremely important, especially in the current age of financial volatility. For long-term income investors who want to avoid uncertainty, dividend cuts or suspensions, experts recommend investing in companies that have been consistently increasing their dividends as well as investing in their core business. These companies include Altria Group Inc (NYSE: MO), Federal Realty Investment Trust (NYSE: FRT) and IBM Common Stock (NYSE: IBM). But in this article we are going to focus on electric utility companies that pay decent dividend yields and also have a strong history. Electric utilities are thriving amid an increasing demand, broadening focus from investors on the back of ESG, renewable energy and changing trends.

The Biden Administration targets to have a carbon-free electricity market and a net-zero-emissions economy by 2050. In line with this, utilities will continue to make significant investments in clean energy foundations, and the electricity market will continue to move into a less centralized standard. For instance, IDACORP, Inc. (NYSE: IDA) set a goal of supplying 100% of its power from carbon-free resources by 2045. In January 2021, the company’s electricity balance already incorporates 45% hydrogen fuel from 17 hydropower generation facilities along the Snake River and its tributaries. IDACORP, Inc. (NYSE:IDA) currently offers a dividend yield of 2.82% and posted its net income of $44.8 million in the first quarter of 2021. Shares of IDA jumped 16% over the last twelve months.

Another notable stock moving towards cleaner energy is Avangrid, Inc. (NYSE: AGR). The company fully agreed to sell its fossil fuel assets and established a dedicated renewables subsidiary to maintain all of the company’s power generation. In 2020, Avangrid Renewables’ parent company pledged an $88 billion investment in green energy. Avangrid, Inc. (NYSE:AGR) currently offers a dividend yield of 3.42% and posted its revenue of $1.97 billion in the first quarter of 2021. Shares of IDA jumped 27% over the last twelve months.

Another notable company that is making the shift to cleaner energy is Duke Energy Corporation (NYSE: DUK). The company is pursuing an ambitious renewable energy policy to help its consumers produce a more active energy expectation. Duke Energy Corporation (NYSE:DUK) targets at least a 50% reduction in carbon emissions by 2030 and net-zero emissions by 2050. By 2025, the corporation expects to purchase 16,000 megawatts (MW) of clean energy sources in the United States.

Electric utility companies like IDACORP, Inc. (NYSE: IDA), Avangrid, Inc. (NYSE: AGR) and Duke Energy Corporation (NYSE: DUK) not only offer safe dividends, they also have thriving business models. That’s why they are included in the list of top electric utility dividend stocks to buy.

AI in the Electric Utility Industry

Innovators worldwide continue to develop innovative solutions to address the increasing demand while moving away from conventional energy production. For instance startup software as a service (SaaS) platform energy provider Innowatts uses artificial intelligence (AI) and data from more than 43 million global meters to help electricity suppliers, distributors, and grid managers unlock meter-level data and simplify business processes. The company’s user base includes Portland General Electric Company (NYSE: POR), Mega Energy, and Avangrid, Inc. (NYSE:AGR).

Just like the electric utility markets, the hedge fund industry is also seeing the winds of change. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

top Electric Utility Dividend Stocks to Buy

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Here is our list of the top 10 electric utility dividend stocks to buy with this context in mind.

Top Electric Utility Dividend Stocks to Buy

10. Eversource Energy (NYSE: ES)

Number of Hedge Fund Holders: 24
Total Value of Hedge Fund Holdings: $511 Million
Dividend Yield as of May 19: 2.86%

We start our list of the top 10 electric utility dividend stocks with Eversource Energy (NYSE:ES). Eversource Energy operates as one of the largest energy providers offering electricity, natural gas, and water to over 4.3 million clients in Massachusetts and New Hampshire. In 2018, the company proved its support for electric vehicles and announced plans to invest around $45 million over five years to install 400 electric car charging sites in Massachusetts. In April 2021, the company entered into a partnership with Orsted, a multinational power company in Denmark, to fund $5 million of research projects specific to offshore wind development through Stony Brook’s Advanced Energy Research and Technology Center (AERTC). The stock ranks 10th in the list of top electric utility dividend stocks to buy.

Eversource Energy (NYSE:ES) currently offers a dividend yield of 2.87% and posted its earnings of $366.1 million in the first quarter of 2021. Shares of ES jumped 7% over the last twelve months. On April 20, Credit Suisse maintained an Underperform on Eversource Energy and raised the price target to $89.

Just like Federal Realty Investment Trust (NYSE: FRT), Duke Energy Corporation (NYSE:DUK), Portland General Electric Company (NYSE:POR), Mega Energy, and Avangrid, Inc. (NYSE:AGR), Eversource Energy is one of the best electric utility stocks to buy.

There were 24 hedge funds that reported owning stakes in Eversource Energy (NYSE:ES) at the end of the fourth quarter, up from 20 hedge funds during the third quarter.

9. CMS Energy Corporation (NYSE: CMS)

Number of Hedge Fund Holders: 24
Total Value of Hedge Fund Holdings: $580 Million
Dividend Yield as of May 19: 2.76%

CMS Energy Corporation (NYSE:CMS) ranks 9th on the list of 10 best electric utility dividend stocks to buy. The Michigan-based energy company has over 6 million customers across the 10 million residents in Michigan. As of 2015, 9% of the company’s power comes from renewable energy sources. On April 30, Credit Suisse maintained an Outperform rating on CMS Energy and raised the price target to $70.

CMS Energy Corporation’s (NYSE:CMS) adjusted net income in the first quarter of 2021 came in at $348 million. Shares of EWBC surged 14% over the last twelve months.

There were 24 hedge funds that reported owning stakes in CMS Energy Corporation’s (NYSE:CMS) at the end of the fourth quarter, down from 29 funds a quarter earlier. The total value of these stakes at the end of Q4 is $580 million.

8. Alliant Energy Corporation (NASDAQ: LNT)

Number of Hedge Fund Holders: 29
Total Value of Hedge Fund Holdings: $276 Million
Dividend Yield as of May 19: 2.85%

Ranking 8th in our list of the 10 best bank stocks for dividends is Alliant Energy Corporation (NASDAQ:LNT), a Wisconsin-based public utility holding company that has over 976,985 electric customers in Iowa and Wisconsin. In 2020, the company announced the launching of its first solar project in Wisconsin on the south side of State Highway 151. The 1-megawatt (MW) community solar project is expected to begin installation in the spring and be completed by the end of 2021. The stock ranks 8th in the list of top electric utility dividend stocks to buy.

Alliant Energy Corporation (NASDAQ:LNT) has a market cap of $14.4 billion. Alliant Energy Corporation’s revenue in the first quarter of 2021 came in at $901 million. Shares of LNT surged 24% over the past twelve months. On May 18, Mizuho upgraded Alliant Energy to Buy and raised the price target to $61.

There were 29 hedge funds that reported owning stakes in Alliant Energy Corporation (NASDAQ:LNT) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $276 million.

7. Edison International (NYSE: EIX)

Number of Hedge Fund Holders: 30
Total Value of Hedge Fund Holdings: $1.44 Billion
Dividend Yield as of May 19: 4.59%

California-based public utility holding company Edison International (NYSE:EIX) ranks 7th on 10 electric utility dividend stocks to buy list. The company was founded in 1886 and has over 15 million customers in a 50,000 square-mile area of central, coastal, and Southern California. Edison International uses at least 46% of clean energy to produce electricity. In 2020, the company via a partnership with Austin Lawrence Gidon expanded into South Africa. The partnership will develop corporate access to international capital markets in South Africa.

Edison International (NYSE:EIX) has a market cap of $21.8 billion and currently offers a dividend yield of 4.59%. The company’s net income in the first quarter of 2021 came in at $259 million. On May 18, Morgan Stanley kept its Equal-Weight on Edison and lowered the price target to $72. Like Altria Group Inc (NYSE: MO), Federal Realty Investment Trust (NYSE: FRT), Duke Energy Corporation (NYSE:DUK) and IBM Common Stock (NYSE: IBM), EIX is one of the best dividend stocks to buy.

There were 30 hedge funds that reported owning stakes in Edison International (NYSE:EIX) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $1.44 billion.

6. NRG Energy, Inc. (NYSE: NRG)

Number of Hedge Fund Holders: 31
Total Value of Hedge Fund Holdings: $1.46 Billion
Dividend Yield as of May 19: 3.80%

Minnesota-based American energy company NRG Energy, Inc. (NYSE:NRG) ranks 6th in our list of the top 10 electric utility dividend stocks to buy. NRG Energy, Inc. offers energy generation and retail electricity. The company has over 3.7 million customers in 20 US states and two Canadian provinces. Earlier this year, the company purchased Direct Energy, a North American energy retailer, in a $3.625 billion all-cash transaction. Like Altria Group Inc (NYSE: MO), Federal Realty Investment Trust (NYSE: FRT), Duke Energy Corporation (NYSE:DUK) and IBM Common Stock (NYSE: IBM), NRG is a decent dividend stock to invest in.

NRG Energy, Inc. (NYSE:NRG) has a market cap of $8.3 billion. The company’s revenue in the first quarter of 2021 came in at $8.09 million. On March 18, Morgan Stanley maintained an Overweight rating on NRG Energy and lowered the price target to $51.

There were 31 hedge funds that reported owning stakes in NRG Energy, Inc. (NYSE:NRG) at the end of the fourth quarter, down from 32 funds a quarter earlier. The total value of these stakes at the end of Q4 is $1.46 billion.

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