In this article, we discuss the top 5 electricity utility dividend stocks to buy. If you want to read our detailed analysis of these stocks and the latest market situation, go directly to Top 12 Electric Utility Dividend Stocks To Buy.
5. Dominion Energy, Inc. (NYSE:D)
Number of Hedge Fund Holders: 34
Dividend Yield (as of May 12): 3.23%
Dominion Energy, Inc. (NYSE:D) provides electricity and natural gas to more than 7 million customers across 16 states in the US. It was founded in 1983, and currently boasts 30 gigawatt of electricity generating capacity along with 10,700 miles of electric transmission and 78,000 miles of electric distribution lines.
On May 11, Dominion Energy, Inc. (NYSE:D) declared $0.6675 per share quarterly dividend, which was in-line with previous. The company’s dividend yield stands at 3.23% as of May 12.
On January 5, UBS analyst Ross Fowler upgraded Dominion Energy, Inc. (NYSE:D) to ‘Buy’ from ‘Neutral’ and increased the price target to $98 from $81. Fowler noted that the firm’s ESG sponsorship appeal will enhance in 2022 as investors look to support companies making the shift towards clean energy. In February, the firm broadened its Net Zero commitments as one of the country’s leading clean-energy companies. Apart from achieving Net Zero carbon and methane emissions from power generation and natural gas operations by 2050, the company will now work to achieve Net Zero for emissions outside of the company’s direct operations, such as emissions by its customers and suppliers.
Investors were seen piling into Dominion Energy, Inc. (NYSE:D) at the end of Q4 2021, with 34 hedge funds reporting bullish bets on the company shares, as opposed to 27 hedge funds in the preceding quarter. Ric Dillon’s Diamond Hill Capital was the largest shareholder of Dominion Energy, Inc. (NYSE:D) at the close of the fourth quarter, with a stake consisting of 3.62 million shares valued at $284.4 million.
4. American Electric Power Company, Inc. (NYSE:AEP)
Number of Hedge Fund Holders: 34
Dividend Yield (as of May 12): 3.18%
American Electric Power Company, Inc. (NYSE:AEP) is an Ohio-based electric utility firm founded in 1906, serving approximately 5.5 million customers across 11 states. It has made sizeable investments towards clean energy, and expects the inauguration of a number of renewable energy facilities within the next two years. It offers shareholders a dividend yield of 3.18% as of May 12, and boasts 17 consecutive years of dividend growth.
On April 25, Credit Suisse analyst Nicholas Campanella initiated coverage of American Electric Power Company, Inc. (NYSE:AEP) with an ‘Outperform’ rating and a price target of $113. The analyst contends that investors should focus on the firm’s strategic pivot of divesting under-earning, low multiple assets.
For the first quarter of 2022, American Electric Power Company, Inc. (NYSE:AEP) posted an EPS of $1.22, outperforming estimates by $0.02. Revenue of $4.6 billion was also above estimates by roughly $200 million, and grew 7.3% year-on-year.
Renaissance Technologies was the largest shareholder of American Electric Power Company, Inc. (NYSE:AEP) at the end of the fourth quarter with a $148 million stake. In total, 34 hedge funds were long on the company shares, with a combined worth of approximately $827 million.
Investment firm ClearBridge Investments talked American Electric Power Company, Inc. (NASDAQ:AEP) in its Q1 2022 investor letter, stating:
“About 5% of the portfolio is in transitioning power companies, typically migrating from coal to renewables. We have been active in encouraging these transitions and added a new position in American Electric Power (NASDAQ:AEP). AEP has the fastest planned renewable energy ramp in the U.S., with plans to both shrink coal and grow renewables by 50% each by 2030. This would drive an 80% emissions reduction, while supporting high single-digit earnings growth at a double-digit return.”
3. Duke Energy Corporation (NYSE:DUK)
Number of Hedge Fund Holders: 36
Dividend Yield (as of May 12): 3.65%
Up next is Duke Energy Corporation (NYSE:DUK), an energy firm based in North Carolina which distributes electricity generated from coal, natural gas, hydroelectric, nuclear fuel and renewable generation such as wind and solar to millions of customers in the states of North Carolina, South Carolina, Florida, Indiana, Ohio, and Kentucky. It also provides natural gas transmission and storage services.
On April 25, Credit Suisse analyst Nicholas Campanella initiated coverage of Duke Energy Corporation (NYSE:DUK) with an ‘Outperform’ rating and a $125 price target. The analyst sees the firm well-positioned on the two core themes of decarbonization rate-of-change and inflation, and sees its size and diverse geographical footprint benefiting it as compared to peers.
Investors were seen snapping up on Duke Energy Corporation (NYSE:DUK) shares at the end of the fourth quarter, with 36 hedge funds reporting bullish bets on the company shares. This is in comparison to 32 hedge funds a quarter ago. Jim Simons’ Renaissance Technologies held 1.74 million shares of the firm valued at $183.2 million, making it the largest shareholder of the firm at the close of Q4 2021.
Duke Energy Corporation’s (NYSE:DUK) revenue for Q1 2022 stood at $7.13 billion, up 15.97% from the year-ago quarter and beating estimates by roughly $808 million. EPS was recorded at $1.30, falling slightly below estimates by $0.03.
2. FirstEnergy Corp. (NYSE:FE)
Number of Hedge Fund Holders: 40
Dividend Yield (as of May 12): 3.72%
FirstEnergy Corp. (NYSE:FE) is an Ohio-based electric utility firm which serves approximately 6 million customers in the states of Pennsylvania, Maryland, West Virginia, New Jersey, New York and Ohio. It generates electricity using coal-fired plants, nuclear reactors, natural gas, wind and solar power generating facilities. As of May 12, FirstEnergy Corp. (NYSE:FE) has grown 14.93% in the last 12 months, and 7.31% in the last 6 months.
FirstEnergy Corp. (NYSE:FE) on May 4 declared $0.39 per share quarterly dividend, in line with previous. This brings the company’s dividend yield to 3.72% as of May 12.
Credit Suisse analyst Nicholas Campanella on April 25 initiated coverage of FirstEnergy Corp. (NYSE:FE) with an ‘Outperform’ rating and price target of $51. The analyst sees the company better positioned than before to address core regulated growth with limited equity issuances, and sees upside potential to its current valuation.
40 hedge funds held positions in FirstEnergy Corp. (NYSE:FE) at the end of the fourth quarter of 2021, with a combined value of $1.75 billion. This shows a positive trend from the previous quarter where 38 hedge funds held $1.47 billion worth of stakes in the firm. The most prominent shareholder of FirstEnergy Corp. (NYSE:FE) at the close of the fourth quarter was Icahn Capital LP, with approximately 19 million shares valued at $788.9 million.
Here is what ClearBridge Investments had to say about FirstEnergy Corp. (NYSE:FE) in its Q4 2021 investor letter:
“On a regional level, the Strategy’s largest exposure is in the U.S. and Canada (44%), consisting of regulated and contracted utilities (31%) and economically sensitive user-pays infrastructure (13%).
During the quarter we initiated new positions in U.S. electric utility FirstEnergy. With supply chain issues, higher housing costs, higher commodity prices and producer price inflation remaining square in the sights for 2022, we think higher inflation is a risk for global markets. We expect growth to slow to trend or below by mid-2022 and U.S.”
1. CenterPoint Energy, Inc. (NYSE:CNP)
Number of Hedge Fund Holders: 25
Dividend Yield (as of May 12): 2.28%
Then there’s CenterPoint Energy, Inc. (NYSE:CNP), a Houston-based energy firm which provides electricity and natural gas to customers across the United States. On April 22, CenterPoint Energy, Inc. (NYSE:CNP) declared $0.17 per share quarterly dividend, which was in-line with previous.
Credit Suisse analyst Nicholas Campanella in late April initiated coverage of CenterPoint Energy, Inc. (NYSE:CNP) with an ‘Outperform’ rating and a price target of $34. The analyst thinks the firm has been realizing the benefits of a wider restructuring, and can still benefit from multiple expansion. Mizuho analyst Anthony Crowdell gave CenterPoint Energy, Inc. (NYSE:CNP) a ‘Buy’ rating on April 5, viewing the stock as a top idea whilst noting that its 8% annual earnings growth is one of the highest in the industry.
Investor confidence in the energy firm soared over the fourth quarter, where 25 hedge funds reported bullish bets on CenterPoint Energy, Inc. (NYSE:CNP) shares. In comparison, 14 hedge funds held positions in the firm a quarter ago. Point72 Asset Management initiated a position in the firm at the close of the fourth quarter and established itself as a leading shareholder, with 1.78 million shares valued at $49.8 million.
Miller Howard Investments mentioned CenterPoint Energy, Inc. (NYSE:CNP) in its Q3 2021 investor letter. The fund said:
“In late August, we increased the portfolio’s cyclical exposure by trimming utilities after a period of relative outperformance and reallocating the capital to midstream energy, which had pulled back over the summer. Additionally, we trimmed CenterPoint Energy (CNP) after periods of relative strength. We had previously increased our positions in late 2020 and February 2021, respectively, after periods of relative weakness.”
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