Top 3 Utilities Stock Picks for the New Year

Muslim Farooque

December 25, 2023 3 min read

In today’s dynamic economic climate, it’s easy to overlook high-performing utilities stocks, which are known for delivering robust operational results and stable growth. Despite the market’s buoyancy, a closer examination reveals why utilities stocks for 2024 warrant serious attention.

Uncertainty looms large in our economy. The recent labor market surge has prompted Wall Street to anticipate a delay in Federal Reserve rate cuts, potentially dampening the prospects of growth stocks.

However, even in the event the Fed opts for rate cuts in the first quarter of the year, utilities stocks for 2024 are poised to gain. Their capital-intensive nature creates a high barrier to entry, limiting competition in the field. Couple this with a stringent regulatory environment, and you have a sector where established players enjoy a significant advantage. In sum, regardless of the economic winds, these utilities stocks for 2024 offer a compelling proposition for the new year.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Duke Energy (DUK)

The logo for Duke Energy (DUK) is seen on a sign at one of the company's offices.

Source: Jonathan Weiss / Shutterstock.com

Duke Energy (NYSE:DUK), an esteemed player in the utility stock arena, offers more than just electric power and natural gas services. Based in Charlotte, North Carolina, Duke benefits from its presence in economically burgeoning eastern states, notably the Carolinas, where a cost-of-living appeal is attracting a youthful demographic. This strategic positioning hints at a promising growth trajectory.

Financially, Duke stands as a model of steady growth, resilient even amid challenges like the pandemic-led downturn. Its financial rebound is striking, with recent revenues marking 7.44% growth on a year-over-year basis, up from $29 billion in 2022. Such figures reinforce Duke’s status as a consistent growth investment.

For investors, Duke’s forward earnings multiple of 17.5 times is compelling, coupled with an attractive forward yield of 4.23%. This financial allure is bolstered by a moderate buy consensus from TipRanks analysts, highlighting Duke Energy as a prudent choice in the realm of utility stocks for 2024.

Enel Chile (ENIC)

Big waving Chilean national flag symbol on square at La Moneda Palace, urban tourist attraction in business district downtown of capital city Santiago de Chile, Chile

Source: Jens_Bee / Shutterstock.com

Enel Chile (NYSE:ENIC), a powerhouse in Chile’s utility sector, boasts a customer base of over two million across 33 municipalities. The company’s commitment to sustainability is evident, with 77% of its energy derived from renewable sources. Aiming for zero emissions by 2040, Enel Chile is setting an example for the industry.

Moreover, Enel Chile’s influence extends through significant stakes in several subsidiaries. It owns 93.5% of Generacion Chile, 99% of Enil Distribucion Chile, and the entirety of Enil Green Power Chile and Enel X Chile. This diverse portfolio underscores its dominance in the region’s energy market.

Despite a downturn in some segments, its net income leaped by 84% in the third quarter. The stock’s 57% year-on-year increase and a whopping 1351% GAP earnings per share growth year-over-year, vastly outperforming the sector median by a jaw-dropping 28987%, affirm its fiscal strength. Additionally, the company’s substantial dividend yield of 9.89% further highlights its financial robustness and appeal to investors.

Algonquin Power & Utilities (AQN)

multiple powerline towers are shown against a sunset and a distant city skyline. AQN stock

Source: zhao jiankang / Shutterstock.com

Algonquin Power & Utilities (NYSE:AQN), a leader in the North American renewable energy and utility sector, has experienced a challenging year with shares down 4%. Specializing in hydroelectric, wind, and solar power, along with utility operations, AQN’s diverse portfolio remains robust despite the market downturn.

Despite the setbacks, Algonquin’s performance amidst the Covid-19 crisis has been commendable. In 2020, the company reported a 3% sales increase over the previous year. Continuing this trend, its trailing 12-month (TTM) sales reached $2.78 billion, marginally surpassing the substantial growth of 2022.

Furthermore, Algonquin is an attractive option for income-focused investors. Offering a forward yield of 6.74%, significantly above the average utility stock yield of 3.75%, it stands out in the sector. While current market trends pose challenges, AQN’s forward earnings multiple of 12.20 times suggests the potential for recovery and growth, making it a noteworthy consideration for those seeking long-term value in renewable energy investments.

On the date of publication, Muslim Farooque did not have (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.