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4 Utility Stocks That Outdid S&P 500 in Turbulent Times

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Jewel Saha
·4-min read
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The year-to-date period has been a roller coaster ride for investors, thanks to the unprecedented economic crisis due to the novel coronavirus outbreak. With the infection spreading like wildfire and medical science having limited knowledge to control the same, fear of uncertainty associated with the pandemic created panic among investors and the mass sell-off resulted in a massive drop in major indexes across the globe. The gains registered by S&P 500 in the early months of 2020 were completely wiped out in the past few months.

Encouragingly, indexes across the globe are registering gains as the process of reopening of commercial and industrial activities have begun.

It has been a turbulent ride for all sectors included in the S&P 500. On Feb 19, 2020, S&P 500 recorded a gain of 4.8% but on Mar 23, 2020, it dropped 30.7%. Reopening of economic activities, improving oil prices, people going back to work, and job additions in May are all having a positive impact on markets, and as a consequence, the S&P 500 Index has recouped much of its losses, recording a year-to-date decline of just 0.5%.

In this difficult time period, the companies belonging to the Zacks Utilities sector continue to provide essential services like electricity, natural gas and water to customers. Even before the economic stimulus package was approved to assist  people who are in financial distress, the majority of utilities operating across the United States decided to continue to providing services even without non-payment of service dues.

Although regulated, domestic-focused utility companies registered a decrease in demand, primarily due to reduced commercial and industrial activities, rising demand from the residential group due to stay-at-home directives offset some of the decline. Per U.S. Energy Administration finding, electricity and natural gas consumption in the United States will drop 5.7% and 3.6%, respectively, in 2020 from the 2019 level.

We expect that demand for utility services will continue to improve from the current level as the year progresses, owing to the positive impacts of reopening of commercial and industrial activities.

Let’s focus on four companies belonging to the Zacks Utility Electric Power industry that distribute regular dividend and have outperformed the S&P 500 in the year-to-date period.

Price Performance (Year to Date)


 
NextEra Energy NEE, which currently carries a Zacks Rank #2 (Buy), delivered positive earnings surprise of 2.4% in the last four quarters. Its long-term (three to five years) earnings growth is currently projected at 7.7%. Its dividend yield is 2.15% and return on equity is 10.38%, better than the industry average of 9.19%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for 2020 earnings has moved up 0.1% in the past 30 days. Its shares have gained 6.9% in the year-to-date period.

Dominion Energy D, having a Zacks Rank #3 Rank at present, delivered positive earnings surprise of 1.3% in the last four quarters. Its long-term earnings growth is currently pegged at 4.7%. Its dividend yield is 4.35% and return on equity is 11.97%.

The Zacks Consensus Estimate for 2020 earnings has moved up 0.5% in the past 30 days and its shares have gained 3.7% in the year-to-date period.

Xcel Energy XEL, a Zacks #3 Ranked stock, delivered positive earnings surprise of 0.3% in the last two quarters. Its long-term earnings growth is currently pegged at 5.9%. Its dividend yield is 2.57% and return on equity is 10.39%.

The Zacks Consensus Estimate for 2020 earnings has moved up 0.4% in the past 30 days and its shares have gained 4.6% in the year-to-date period.

WEC Energy Group WEC, also a Zacks #3 Ranked stock, delivered positive earnings surprise of 5.6% in the last four quarters. Its long-term earnings growth is currently projected at 5.9%. Its dividend yield is 2.66% and return on equity is 11.4%.

The Zacks Consensus Estimate for earnings for 2020 has been unchanged in the past 30 days and its shares have gained 1.3% in the year-to-date period.

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WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
 
Xcel Energy Inc. (XEL) : Free Stock Analysis Report
 
Dominion Energy Inc. (D) : Free Stock Analysis Report
 
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
 
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