Top Utilities Stocks for May 2022

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., Duke Energy Corp., and Xcel Energy Inc.

Utilities stocks, as represented by the Utilities Select Sector SPDR ETF (XLU), an exchange-traded fund, have outpaced the broader U.S. stock market over the past year. XLU has provided a total return of 15.9% over the past 12 months, compared with the Russell 1000 Index’s total return of 4.4%. These market performance numbers and all statistics in the tables below are as of April 21, 2022.

Here are the top three utilities stocks with the best value, fastest growth, and 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 that you’re paying less for each dollar of profit generated.

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• NRG Energy Inc.: NRG Energy is an integrated power company that generates electricity and provides energy solutions and natural gas to residential, commercial, and industrial customers throughout the United States and Canada. On April 20, NRG announced a quarterly dividend of $0.35 per common share. The dividend is payable on May 16 to shareholders of record as of May 2, 2022.
• Brookfield Renewable Corp.: Brookfield Renewable provides renewable energy globally. Its portfolio of renewable energy businesses includes hydroelectric, wind, solar, and storage facilities in North America, South America, Europe, and Asia.
• UGI Corp.: UGI, through its subsidiaries, distributes and markets energy products and services worldwide. The company operates natural gas and electric utilities, distributes energy, manages midstream energy assets, and more. On April 21, UGI announced that its subsidiary, UGI Energy Services LLC, acquired a 33% equity interest in Ag-Grid Energy LLC. Ag-Grid is a renewable energy producer that develops and operates small-scale renewable power projects in Connecticut and Massachusetts, with a focus on lowering emissions. Terms of the acquisition were not disclosed.

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 year-over-year (YOY) percentage revenue growth and 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 figure or the other unrepresentative of the business in general. Companies with a quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

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• OGE Energy Corp: OGE Energy is a holding company with investments in energy and energy service providers offering physical delivery for electricity in Oklahoma and western Arkansas. It is the parent company of Oklahoma Gas and Electric Co.
• DTE Energy Co.: DTE Energy is a Detroit-based diversified energy company with operating units that include a electric utility that serves customers in southeastern Michigan and a natural gas utility serving customers throughout Michigan.
• Consolidated Edison Inc.: Consolidated Edison provides power generation and energy distribution services through its subsidiaries to customers throughout the U.S. It operates regulated electric, gas, and steam utility facilities, and develops and operates renewable and energy infrastructure assets. Con Edison declared a quarterly dividend of $0.79 per common share on April 21. The dividend is payable June 15 to shareholders of record as of May 18, 2022.

These are the utilities stocks that had the highest total return over the past 12 months.

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• Vistra Corp.: Vistra is a holding company that, through subsidiaries, provides integrated retail and electric power generation throughout the U.S. The company reported Q4 2021 results on Feb. 25 for the period ended Dec. 31, 2021. For that period, Vistra posted $731 million in net income compared with net loss for the prior-year quarter, driven mainly by a $544 million allocation from of Electric Reliability Council of Texas. securitization. The company’s next earnings report, for Q1 2022, is on May 6.
• CenterPoint Energy Inc.: CenterPoint Energy is a domestic energy delivery company. It provides electric transmission and distribution, natural gas distribution, and energy services operations.
• FirstEnergy Corp.: FirstEnergy’s subsidiaries comprise one of the biggest investor-owned electric systems in the U.S. The company transmits, distributes, and generates electricity, providing services in Ohio, Pennsylvania, West Virginia, New York, and additional states. FirstEnergy reported Q1 2022 results on April 21. For that period, the company reported a 14.0% YOY decline in net income as revenue grew by 11.1%. Results were impacted by accounting policy changes, share dilution related to a common equity financing transaction in late 2021, higher operating expenses, and other factors.

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