Utility companies supply essential services like electricity, natural gas and water to nearly every home and business across the United States. These heavily regulated corporations rank among the stock market’s most stable and consistent investments today. Utility stocks tend to appreciate slowly over time, making them appealing to investors focused on long-term portfolio growth and recurring income.
For those looking to invest in the utility sector, we covered three stand-out utility stocks that analysts also rate as a Strong Buy. These stocks are positioned for steady gains, making them potentially profitable places to put your money if you have a buy-and-hold strategy.
Sempra Energy (SRE)
The first company on our list of utility stocks has powered the past and will power the future: Sempra Energy (NYSE:SRE). The company was founded in 1998 and established its position as a leading energy infrastructure company globally. Today, Sempra’s headquarters is in San Diego with an enterprise value of $77 billion. The company powers homes and businesses through four key segments: electricity and natural gas transmission, distribution, storage and infrastructure development.
Recently, Sempra strengthened its global presence and commitment to sustainable energy through international collaborations like the ReaCH4 project and leadership in the U.S.-Japan Business Council.
In terms of financials, Sempra reported solid third-quarter earnings of $721 million, up 48% from last year’s third quarter. Earnings per share came in at $1.08, a 10% increase. For the first nine months of this year, the company reported earnings of $2.293 billion, up nearly 40% from last year.
On the other hand, analysts rated Sempra a Strong Buy rating with an upside potential of over 21%, based on an $89 price target. Considering these factors, Sempra’s latest financial results reflected a positive picture of the company’s performance.
DTE Energy (DTE)
The next company on our list of utility stocks has served Michigan for over 100 years — DTE Energy (NYSE:DTE). Today, the company provides energy services to millions across the state. DTE generates and distributes electricity to around 2.3 million customers in southeast Michigan using a diverse mix of power sources like fossil fuels, hydroelectric dams, nuclear plants, wind farms and solar arrays. Apart from that, about 1.3 million families in Michigan rely on DTE for their natural gas needs.
Beyond its core utility offerings, DTE has business operations in other energy-related sectors as well, including metallurgical coke production, independent power generation and energy trading.
The company recently earned recognition for its MIGreenPower Program, ranking it as the top utility green tariff program in the U.S. That highlights DTE Energy’s commitment to sustainability and positions the company favorably, attracting demands from major organizations and potentially driving the development of new renewable energy projects.
DTE Energy announced its third-quarter financial results, with $332 million in earnings compared to $387 million in the same quarter last year. Operating margins were $298 million, and earnings per share of $1.44. Though full-year earnings guidance was scaled back slightly due to severe storms, analysts still rate DTE as a Strong Buy, with an upside potential of around 13% from current levels.
On the other hand, DTE’s energy efficiency programs helped customers save over $400 million on bills, underscoring the company’s customer focus. The company also plans to invest $9 billion over 5 years to improve electric reliability by 60% across its network, putting the company in an optimal position for future growth.
The last utility stock on our list is Entergy (NYSE:ETR), a major power company founded in 1913 and headquartered in New Orleans, Louisiana. Entergy generates and sells electricity across portions of Arkansas, Louisiana, Mississippi and Texas. The company operates gas, nuclear, coal, hydroelectric and solar power plants.
Entergy delivers electricity to 3 million customers across its service territory. The company has two main business segments: a utility segment providing retail power services and a wholesale commodities segment that owns power plants selling electricity to electric cooperatives, power traders and other power generators.
Entergy was recently recognized as a top utility for economic development for the 16th consecutive year. That recognition highlights the company’s impact on local economies and its role in environmental sustainability. It also positively influences ETR’s performance and will potentially improve its overall valuation.
In the third quarter, Entergy reported adjusted EPS of $3.27, up from $2.84 in the same period last year. The company narrowed its 2023 guidance to between $6.65 and $6.85 in adjusted EPS. Entergy sold part of its gas distribution business in a transaction worth $484 million. Dividend growth investors will appreciate Entergy increasing its quarterly dividend by 6% to $1.13 per share.
Key drivers of its earnings were weather, regulatory actions, lower operating costs and investment income. Offsetting factors included a $78 million write-off at Entergy Arkansas and higher depreciation and interest costs.
Meanwhile, analysts rate Entergy stock a Strong Buy rating with a 21% potential upside to $121 per share.
On the date of publication, Rick Orford did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.