The utilities sector is made up of companies that provide electricity, natural gas, water, sewage, and other services to homes and businesses. Many of these companies are heavily regulated. They include major utilities companies such as Dominion Energy Inc. (D), Duke Energy Corp. (DUK), and Xcel Energy Inc. (XEL).
Utilities stocks, as represented by the Utilities Select Sector SPDR ETF (XLU), have significantly underperformed the broader market over the past year. XLU has provided a total return of 14.9% over the past 12 months, as compared with the Russell 1000 index’s total return of 40.6%, as of June 22, 2021. All statistics in the tables below are also as of June 22.
Here are the top 3 utilities stocks with the best value, the fastest growth, and the most momentum.
These are the utilities stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
| Best Value Utilities Stocks | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing P/E Ratio | |
| Sempra Energy ( SRE) |
136.95 | 41.5 | 10.4 |
| UGI Corp. ( UGI) |
45.48 | 9.5 | 10.8 |
| Entergy Corp. ( ETR) |
103.22 | 20.7 | 13.0 |
Source: YCharts
- Sempra Energy: Sempra is an energy services holding company that generates electricity, delivers natural gas, and operates natural gas pipelines. It also operates a wind power generation project. On June 15 Sempra announced a quarterly dividend of $1.10 per share of common stock, payable on July 15 to shareholders of record as of July 7, 2021. The company also announced a dividend of $1.6875 per share on its 6.75% Mandatory Convertible Preferred Stock, Series B, which also is payable July 15.
- UGI Corp.: UGI is a domestic and international distributor of energy products and services. It offers propane, natural gas, and electricity.
- Entergy Corp.: Entergy is an integrated energy company that provides electric power and distribution. The company delivers electricity to retail customers across several states in the southern U.S. Entergy also owns and operates nuclear plants. In late May, Entergy announced that it completed the sale of the Indian Point Energy Center, which is the site of the Indian Point nuclear plants, located 25 miles from New York City. The nuclear operations were shut down after years of opposition from politicians and citizens. The buyer of the Center is a subsidiary of Holtec International, which will complete decommissioning of the site. The sale was for an undisclosed sum and first announced in 2019.
Fastest Growing Utilities Stocks
These are the top utilities stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
| Fastest Growing Utilities Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Essential Utilities Inc. ( WTRG) |
46.82 | 11.5 | 260.0 | 128.3 |
| FirstEnergy Corp. ( FE) |
37.50 | 20.4 | 342.9 | 0.6 |
| NiSource Inc. ( NI) |
25.15 | 9.9 | 350.0 | -3.7 |
Source: YCharts
- Essential Utilities Inc..: Essential Utilities is a regulated utility holding company that provides water, wastewater, and natural gas services to about 5 million customers in eastern, midwestern and southern states, including Pennsylvania, Ohio, Texas, Illinois, New Jersey, and Virginia under the Aqua and Peoples brands.
- FirstEnergy Corp.: FirstEnergy generates and distributes electricity and explores, produces, and distributes natural gas. It also offers energy management and similar services. In late April, First Energy reported that net income had soared to $335 million in Q1 2021 on flat revenue growth, compared to $74 million in the same quarter a year earlier. The company said that results were aided by special one-time items and a 12.8% increase in residential sales as customers spent more time at home.
- NiSource Inc.: NiSource is an energy holding company. Through subsidiaries, it provides natural gas, electricity, and other energy products and services to customers in the Gulf Coast, Midwest, and New England regions. On May 25 the company reported that it would pay a common stock quarterly dividend of $0.22 per share on Aug. 20 to shareholders of record as of July 30, 2021. Simultaneously, NiSource also announced a dividend on the corporation’s 6.50% Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock.
These are the utilities stocks that had the highest total return over the last 12 months.
| Utilities Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| The AES Corp. ( AES) |
25.74 | 17.2 | 89.4 |
| UGI Corp. (UGI) | 45.48 | 9.5 | 47.2 |
| CenterPoint Energy Inc. ( CNP) |
24.79 | 14.4 | 41.2 |
| Russell 1000 | N/A | N/A | 40.6 |
| Utilities Select Sector SPDR ETF (XLU) | N/A | N/A | 14.9 |
Source: YCharts
- The AES Corp.: AES acquires, owns and operates distribution operations and generation plants in several countries. The company sells energy to customers under its regulated businesses, and it also sells electricity under long-term contracts.
- UGI Corp.: See company description above.
- CenterPoint Energy Inc.: CenterPoint Energy is a public utility holding company that owns and operates electric transmission and distribution, power generation, and natural gas distribution facilities. It serves customers in states including Arkansas, Indiana, Louisiana, Ohio, Oklahoma, and Texas.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.