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Best Utility Stocks

Take a look at some of the biggest movers for utility stocks. This list is updated daily and includes premarket, during market, and after hours movers.

The term utility stocks is used for publicly traded companies that provide electric, water, and gas services to general public and industrial consumers. We could further classify them as electric utilities, water utilities, and gas utilities.

 

Types of utility stocks

Electric utilities engage in the generation, transmission, and distribution of electric energy. They can use coal, natural gas, nuclear energy and renewable sources to produce electric energy. Pinnacle West Capital Corporation (NYSE: PNW) is an example of an electric utility.

The Southern Company (NYSE: SO) and Duke Energy (NYSE: DUK) are also known as electric utilities, but they provide both electric and gas services. Natural gas utilities own gathering, processing, storage and transportation facilities for natural gas and ONEOK, Inc. (NYSE: OKE) is one of the largest gas utilities. Water utilities don’t own water, but they own property rights or access to the water.

To provide their services they need to invest in equipment necessary to collect water, clean it and distribute it. They also engage in collecting of the wastewater. American Water Works Company (NYSE: AWK) is a water utility, which provides its services in the U.S. and Canada.  

The business models

The business model of utilities requires large infrastructure investments in facilities for production, transport, and storage, which makes it difficult for companies to enter this market and therefore it has characteristics of a natural monopoly.

In the early days, the utility companies were owned only by the government, but that is not the case anymore as private operators are now allowed to enter the utility market. Some states decided to regulate its energy market, while others opted for deregulation. In the regulated market, utilities enter into agreements with municipalities and counties and they award them rights to offer services to residents. Customers are protected from unrealistically high prices and price fluctuations because a utility has to conform to a rate set by the regulator.

The rate is set in such a way so the utility can cover its costs and earn a rate of return. In the deregulated energy market, there are no price limitations, but more participants are competing for their share of the market and their competition controls the price. NextEra Energy (NYSE: NEE) is currently a utility company with the highest market capitalization and it can serve as an example of a business model for an electric utility. It operates through its subsidiary Florida Power & Light Company (FPL) in a regulated market for electric energy in Florida.

To provide its services it needed a large investment in its 26,600 MW of generating capacity, 75,000 circuit miles of transmission and distribution lines and approximately 620 substations. The company provides its services to both retail and wholesale customers. The price that it may charge to its customers is approved by regulatory bodies, Florida Public Service Commision (FPSC) for retail and U.S. Federal Energy Regulatory Commission (FERC) for wholesale. FPL’s service to retail customers is provided under franchise agreements with municipalities and counties.

The typical duration of an agreement is 30 years and during that period, the municipality or county agrees not to form its own utility while FPL has the right to offer electric service to residents. These agreements cover 88 percent of FPL’s retail business and they have varying expiration dates through 2048.

Competition and barriers

The agreements don’t eliminate all competition since any customer can elect to provide hers or his own electric services. With the development of technology self-generation of electric energy by customers becomes a bigger threat to every electric utility.

FPL deals with this issue by making sure that its service is cheaper than any alternative. FPL also has to worry about competition in the wholesale segment and about competition from the alternative energy sources.         

The utility stocks are often called defensive stocks because their business performance is not heavily impacted by the economic cycle. Even in recessions, people need electricity, water, and heating. They pay a high dividend yield so they are interesting to income investors. A comparison of the Utilities Select Sector SPDRA ETF (NYSE: XLU) with the S&P 500 shows that the utility stocks performed slightly better than the market in periods of broad market declines, but they have also significantly underperformed the market in the periods of uptrends.  

Investors in the utility stocks have to worry about government regulations of the energy market and they also have to closely monitor interest rates. Every dividend stock is sensitive to changes in interest rates and the utility stocks are not an exemption. Since December, Utilities Select Sector SPDRA ETF dropped almost 12 percent and in February it was trading almost 18 percent lower from its December highs.

The main reason behind the decline was the speculation of higher interest rates. The next Federal Funds Rate meeting is on June 13 and it will be interesting to see what kind of tone will the Fed set in its statement.

Symbol Open Change Change % Volume Close
CNP
CenterPoint Energy
29.29 0.19 0.65% 1.58M 29.48
OTTR
Otter Tail
54.92 0.37 0.67% 22.20K 55.29
BIP
Brookfield Infr Partners
48.63 0.34 0.7% 55.58K 48.97
CEPU
Central Puerto
2.79 0.02 0.72% 25.47K 2.81
AES
AES
16.90 0.13 0.77% 2.42M 17.03
TVC
Tennessee Valley
25.79 0.26 1.01% 6.93K 26.05
EIX
Edison Intl
71.58 0.74 1.03% 55.37K 72.32
PCG
PG&E
8.10 0.09 1.07% 1.81M 8.18
EBR
Centrais Eletricas
9.14 0.11 1.2% 58.25K 9.25
PPL
PPL
32.73 0.42 1.28% 1.45M 33.15
CZZ
Cosan
16.27 0.21 1.29% 34.37K 16.48
MGEE
MGE Energy
74.50 1.06 1.42% 14.98K 75.56
GWRS
Global Water Resources
12.06 0.18 1.45% 2.94K 12.24
NGG
National Grid
58.44 0.94 1.6% 28.38K 59.38
PEGI
Pattern Energy Group
26.80 0.46 1.72% 1.34M 27.26
TERP
TerraForm Power
16.48 0.33 1.97% 54.00K 16.80
ELP
Cia Paranaense De Energia
12.86 0.29 2.26% 11.10K 13.15
NEP
NextEra Energy Partners
51.19 1.33 2.6% 10.11K 52.52
CWCO
Consolidated Water Co
16.37 0.43 2.63% 33.60K 16.80
SBS
Companhia De Saneamento
12.83 0.44 3.43% 76.97K 13.27
Symbol Open Change Change % Volume Close
AEE
Ameren
77.10 -0.39 -0.51% 52.75K 76.71
CDZI
Cadiz
11.74 -0.06 -0.51% 35.04K 11.68
SJI
South Jersey Indus
32.18 -0.18 -0.56% 89.00K 32.00
CPL
CPFL Energia
15.83 -0.09 -0.57% 47.63K 15.74
PNW
Pinnacle West Capital
94.57 -0.58 -0.61% 22.69K 93.99
FTS
Fortis
41.69 -0.28 -0.67% 59.56K 41.41
YORW
York Water
43.96 -0.32 -0.73% 12.03K 43.64
D
Dominion Energy
82.85 -0.62 -0.74% 83.08K 82.24
EVRG
Evergy
63.94 -0.51 -0.8% 47.45K 63.43
ENIA
Enel Americas
9.52 -0.08 -0.81% 32.21K 9.44
AZRE
Azure Power Global
12.25 -0.10 -0.82% 1.21K 12.15
SPKE
Spark Energy
9.38 -0.08 -0.85% 35.32K 9.30
KEP
Korea Electric Power
11.00 -0.11 -0.99% 18.57K 10.89
ARTNA
Artesian Resources
37.30 -0.42 -1.13% 4.94K 36.88
JE
Just Energy Group
2.41 -0.03 -1.24% 54.56K 2.38
PAM
Pampa Energia
15.40 -0.25 -1.59% 24.02K 15.16
NFE
New Fortress Energy
17.53 -0.31 -1.77% 28.21K 17.22
EDN
Empresa Distribuidora y
5.89 -0.12 -2.04% 6.54K 5.77
ENIC
Enel Chile
4.39 -0.19 -4.21% 12.28K 4.21
SKYS
Sky Solar Holdings
0.63 -0.03 -5.46% 67.13K 0.60
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