With the recent steep rally in interest rates, the Utilities Sector has seen its worst sell-off since the financial crisis. However, this sell-off has created some attractive buying opportunities for investors looking to capitalize on the potential of utility stocks. Despite the rotation of defensive investors into Treasuries, there are certain utility stocks that offer strong dividend yields, promising earnings expectations, and minimal risk.
One such stock is Vistra (VST), a leading integrated power company that operates across the energy value chain. Vistra is known for its diverse portfolio, which includes electricity generation, wholesale energy sales, and retail services. The company is committed to sustainable and efficient energy solutions, managing a range of energy sources such as natural gas, coal, and renewables.
Vistra has outperformed the sector year-to-date and even the broader market. It currently offers a dividend yield of 2.5% and has raised its payment by an average of 13.3% annually over the last five years. Analysts have revised earnings estimates significantly higher for Vistra, and it boasts a top Zacks Rank of #1 (Strong Buy).
Another appealing utility stock to consider is Consolidated Water (CWCO), a water solutions company that focuses on seawater desalination plants and water distribution systems. The company provides fresh water through its desalination facilities to various locations, particularly in the Caribbean region. With strong returns over the last decade, Consolidated Water has demonstrated its ability to deliver steady growth.
Analysts have unanimously upgraded CWCO with a Zacks Rank #1 (Strong Buy) rating. Earnings estimates for the current quarter have been raised by 12% and are expected to grow an impressive 660% year-over-year. Although the stock is trading at a slightly higher earnings multiple compared to the industry average, Consolidated Water’s strong growth potential makes it an attractive investment.
Overall, both Vistra and Consolidated Water are top-performing utility stocks that offer the potential to outperform the market. These companies have businesses that are unlikely to be at risk in the foreseeable future, making them solid long-term investment options for investors looking for steady returns.
Disclaimer: The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.