Best Utility Stocks Right Now • Updated Daily • Benzinga

The stock market often goes through ups and downs, but there are ways to mitigate risk. When the market gets tough, many investors turn to utility stocks to hedge their riskier investments. These stocks have historically performed well and held their value during particularly volatile times – and many of these stocks also pay attractive dividends.

Today we’re going to take a look at these stocks that investors are watching. We’ll also introduce you to some brokers you can use to start buying them, index funds, and other stocks under $5 worth exploring.

Quick Look at the Best Utility Stocks

NRG Energy, Inc.
IGU Corp
Dominion Energy
NextEra Energy
P&E

Insight

Utilities stocks are stocks that represent companies providing utilities to residential and commercial properties. Some services in the utilities sector include:

Electricity
Water and sewer services
Gas
Garbage and waste removal

Many dividends are convenient monopolies in their field. The initial cost to create a utility system is so high that in many areas there is only one company providing each individual service. This means that utilities generally show less volatility, but also less growth than other sectors.

In many cases, utilities also pay investors higher dividends than competing sectors. A dividend is a portion of a company’s profits that a corporation pays out to shareholders on a quarterly, monthly, or annual basis. Although very few companies are required to pay dividends, utilities tend to attract dividend investors looking to create passive income streams through their higher payouts.

Best Online Brokers for Utilities Stocks

Before you can start buying utility stocks, you will need to open an account with a broker. A broker is a company or entity authorized to buy stocks on your behalf, sometimes in exchange for a commission or fee. Whether you’re looking for high-value utility stocks or stocks under $10, the right broker can make investing simple.

Most brokerage firms now allow you to open an account online and transact through a desktop platform. Don’t have a brokerage account? Consider a few of our favorites below.

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Features To Look For In Utility Stock

There are dozens of utility stocks to invest in, but not all utility stocks are of equal value. Here are some key characteristics to look for when you start comparing utility stocks.

A reasonable dividend yield: Many utility investors want to create a passive stream of income by collecting dividends on their investments. While it can be tempting to compare stocks based on the dollar amount of the dividend, you should instead look at the stock’s dividend yield. Dividend yield is a ratio that compares a stock’s current price with its annual dividend payout.

Beware of stocks that have a very high yield – as a rule of thumb, a yield above 10 usually means a dividend cut is imminent.

Higher earnings per share: The earnings per share (EPS) of a stock divides a company’s total net earnings by the total number of shares outstanding. Look for companies with a positive EPS – this indicates that the company is profitable and unlikely to go bankrupt in the near future.
A lower P/E ratio: A price-to-earnings ratio (P/E ratio) is equal to the company’s current stock price divided by its EPS. When shopping for utility stocks, look for those with a lower P/E ratio – this may indicate that the stock is undervalued and its price is likely to rise soon.

Fuel your wallet with utilities

With above-average dividends and many select stocks under $20 worth investing in, utility stocks can be a valuable addition to any portfolio. Like any other type of investment, you should never rely on utility stocks to make up the bulk of your portfolio. Although utilities are exceptionally stable, use them to supplement a portfolio with large-cap funds, mutual funds, and total market index funds to protect your investments.