3 Great Utility Stocks to Buy for Steady Stream of Income

The Zacks Utilities sector is made up of companies that provide basic amenities like water, sewage services, electricity and natural gas. Since utility companies have a consistent source of income and their operations are not impacted by fluctuations in the economy, it is seen as a defensive, secular industry. Utilities benefit from various favorable factors, such as low variation for demand and services, new electric rates, customer additions, cost management and the implementation of energy-efficiency programs.Regular dividends, bonus shares, share repurchases and price increases during trading sessions provide investors with a return on their stock investment. Investors can fortify their position in established, regulated and domestic utility companies for a consistent flow of income. Utility businesses are frequently regarded as bond alternatives due to their consistent performance and capacity to pay dividends on a regular basis. Their dividends are frequently less volatile than those of other stocks and outperform other fixed-income assets.Demand for utility services tends to remain stable even during turbulent economic conditions. Our Earnings Trends report indicates 9.1% earnings growth for the utility space in fourth-quarter 2024. The growth momentum is also expected to continue in the first two quarters of 2025.Since utilities require a significant amount of expensive infrastructure, they carry large amounts of debt on their balance sheets. They are extremely vulnerable to shifts in the market interest rate because of their debt burdens. The Fed has already reduced the fund rate by a cumulative 75 basis points since September 2024. There is a possibility of another rate cut when the Fed meets in December. Capital-intensive utilities should have better prospects due to the rate decline because their capital servicing costs will decrease, increasing margins and profitability.The U.S. electric power sector has pledged to move toward cleaner sources of energy for electricity production. Per a U.S. Energy Information Administration (“EIA”) report, the annual share of U.S. electricity generation from renewable energy sources will be 23% in 2024 and 25% in 2025. EIA also expects U.S. sales of 2% more electricity this winter compared with last winter. The increase can be attributed to 3% more sales to residential customers because of expected colder weather than the previous year.Investing in the Most Promising Utilities StockInvestors can bet on utilities like New Jersey Resources NJR, Dominion Energy D and Evergy EVRG, which have outperformed the Zacks Utilities sector in the past six months. These utilities are investing steadily to expand operations, which should create more opportunities for revenue generation and free cash flow. Image Source: Zacks Investment ResearchHistorical dividend payments should not be the only criterion for selecting utilities, as they do not guarantee future dividend payments. We have selected three utility stocks based on their dividend yield and earnings growth expectations for 2025.The stocks selected have an impressive VGM Score of B. New Jersey Resources carries a Zacks Rank #2 (Buy), while Dominion Energy and Evergy have a Zacks Rank #3 (Hold) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Back-tested results have shown that the returns are even better for stocks with a solid VGM Score and a favorable Zacks Rank.Wall Township, NJ-based New Jersey Resources is an energy services holding company that, through its subsidiaries, provides safe and reliable natural gas and clean energy services, including transportation, distribution, asset management and home services. NJR consistently invests in upgrading and maintaining its existing infrastructure. The company expects capital expenditures to be in the range of $495-$675 million for fiscal 2025.NJR’s current dividend yield of 3.78% is better than the sector’s average of 3.3%. The Zacks Consensus Estimate for fiscal 2025 earnings per share (EPS) indicates a year-over-year improvement of 5.8%. The stock has gained 13.9% over the past six months compared with the sector’s growth of 8.1%.Richmond, VA-based Dominion Energy, with its subsidiaries, produces and transports energy in the United States. It is a major energy company engaged in regulated and non-regulated electricity distribution, generation and transmission businesses. Dominion Energy has a well-chalked-out long-term capital expenditure plan to strengthen and expand its infrastructure. It plans to invest $9.8 billion in 2024 and $43 billion in the 2025-2029 period.D’s current dividend yield is 4.99%. The Zacks Consensus Estimate for 2025 EPS indicates year-over-year growth of 22.9%. The stock has gained 8.3% over the past six months.Kansas City, MO-based Evergy, through its operating subsidiaries Kansas City Power & Light Company, Evergy Metro, Inc. and Evergy Missouri West, Inc., provides clean, safe and reliable energy to more than 1.7 million customers in Kansas and Missouri.Evergy’s long-term investment plans are focused on transmission, distribution infrastructure upgrades and customer-facing platforms to improve reliability. The company targets nearly $16.2 billion of capital investments for 2025-2029, including a new generation of around $5.3 billion, which is expected to be a renewable one.EVRG’s current dividend yield is 4.35%. The Zacks Consensus Estimate for 2025 EPS indicates a year-over-year increase of 4.9%. The stock has gained 16.8% over the past six months. Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dominion Energy Inc. (D): Free Stock Analysis Report NewJersey Resources Corporation (NJR): Free Stock Analysis Report Evergy Inc. (EVRG): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks