I appreciate any investor who’s wise enough to hedge their bets. While jumping into the fray with tech stocks, artificial intelligence and the latest fad can be a smart way to make money, it’s also important to diversify your portfolio with some safer, income-generating plays like utilities stocks.
Utilities stocks may not give you the massive returns of tech stocks in 2023, but they’re much safer investments. Utility companies provide electricity, water and gas that are necessary for people’s daily lives. That makes them recession-proof, particularly when the market takes a turn for the worse.
And more often than not, utilities stocks can provide the added benefit of a solid dividend yield. Many utility stocks have a long history of paying dividends thanks to the consistent profits that the companies make.
Dividends are great for both retired investors who need that money for regular expenses, and for younger investors who will reinvest their payouts back into their portfolios.
Today we’re using the Portfolio Grader to identify A-rated utilities stocks. The Portfolio Grader ranks all stocks based on earnings performance, revenue growth, dividend yield, momentum, analyst sentiment and more.
If you’re looking for safe utilities stocks, it makes perfect sense to choose those that have an “A” rating like these names.
Enel Chile (ENIC)
Enel Chile (NYSE:ENIC) is the major power company in Chile. It has over 2 million customers spread over 33 municipalities. Roughly 77% of the power it generates comes from renewable sources, and the company plans to reach a goal of zero emissions by 2040.
The company has solar, wind, geothermal, hydroelectric and thermoelectric plants.
It’s also broadly diversified. Enel Chie owns 93.5% of the Generacion Chile company, 99% of the Enil Distribucion Chile company, and all the Enil Green Power Chile and Enel X Chile companies.
Net income for the third quarter was up 84% from a year ago, although operating revenues in the Generation business were down 1.1% because of lower gas sales and revenues in the Commercialization segment were down 20% from a year ago.
Despite those headwinds, ENIC stock is up 48% this year and pays a dividend yield of 0f 10.5%. And performance should improve as gas prices rise. ENIC gets an “A” rating in the Portfolio Grader.
Consolidated Water Co. (CWCO)
Consolidated Water (NASDAQ:CWCO) operates water supply and treatment facilities in the U.S. and the Caribbean. It designs, engineers and manufactures equipment for commercial and municipal water production, supply and treatment.
Its holdings include water plants and solar projects in the Cayman Islands, the Bahamas and the British Virgin Islands.
Its Perc Water subsidiary designs, builds, operates and manages water infrastructure projects throughout the United States. Projects include a contract to build a desalination plant in Hawaii, as water treatment plant in Arizona, and a wastewater treatment plant at Edwards Air Force Base in California.
Revenue in the third quarter was $49.9 million, up 99% from a year ago. Services revenue was $29.4 million, an increase of 237% from the same quarter a year ago.
CWCO stock is up 150% this year and also provides a dividend yield of 1%. It gets an “A” rating in the Portfolio Grader.
Genie Energy (GNE)
Genie Energy (NYSE:GNE) is a New Jersey-based utility company that provides natural gas and electricity, focusing on deregulated markets in the U.S.
The company works with commercial companies and community solar developers to plan, finance and build solar projects.
The company operates in 18 states and the District of Columbia, providing roughly 5% of total U.S. electric generation with 155 gigawatts of installed capacity.
Earnings in the third quarter were up 53.8% to $125 million, although profits were down 4.8% and margins dropped from 53.1% to 32.9% thanks to lower energy costs in 2023.
However, that didn’t hurt the stock price, which is up 129% in 2023. GNE also provides a dividend yield of 1.3%. It gets an “A” rating in the Portfolio Grader.
Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (EDN)
Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (NYSE:EDN), also known as Edenor, is Argentina’s largest electricity distribution company. The company has over 3.26 million customers and distributes about 20% of the company’s energy.
It also has an exclusive contract to supply power to the northwestern zone of the greater Buenos Aires metropolitan area.
The political situation in Argentina is worth watching. The country has increasing poverty and triple-digit inflation, a combination that prompted an angry electorate to select a right-wing libertarian candidate, Javier Milei, as its new president.
Milei has promised to shut down the country’s central bank, shift the economy from the peso to the U.S. dollar, and cut spending dramatically.
It’s unclear what that will mean for EDN stock, but Edenor is up 115% in 2023, including a jump of 63% since election day.
EDN doesn’t pay out a dividend, but it still gets an “A” rating in the Portfolio Grader.
Star Group (SGU)
Connecticut-based Star Group (NYSE:SGU) provides oil, propane and HVAC services to residential customers. Its customers get home heating oil and propane deliveries rather than being hooked up to a municipal utility.
Star Group operates in the District of Columbia and Connecticut, Delaware, Rhode Island, Maryland, West Virginia, Pennsylvania, Virginia, New Jersey, New York and Michigan.
As a limited partnership, investors are unitholders and must report gains or losses on their federal tax returns. Star Group also pays a quarterly dividend with a more-than 4% yield.
Earnings in the third quarter were depressed as oil prices were lower than in 2022. Revenue of $300.1 million was down 31.7% from a year ago, and the volume of home heating oil and propane dropped 26.2% from a year ago because of warmer weather and customer attrition.
That resulted in a net loss in the quarter of $22.9 million, an increase of $11.8 million in losses from last year.
All that may sound rough, as energy prices in 2022 were very high and any comparison to 2023 would be a tough matchup. But SGU stock is still up 6% this year. That’s what I call a good defensive stock.
Vistra Corp (VST)
Vistra (NYSE:VST) is a Texas energy company with a broad portfolio of brands including Luminant, U.S. Gas & Electric, Ambit Energy, Homefield Energy, TXU Energy and Dynegy.
It has a large footprint in Texas, with operations also in California, Michigan, Kentucky, Illinois, Indiana, Ohio, West Virginia, Virginia and the Northeast. The company has over 4 million retail customers and generates enough electricity to power 20 million homes through solar, energy storage and nuclear projects.
The company recorded net income in the third quarter of $502 million, down from $678 million in the same quarter a year ago. But Vistra could still increase its full-year 2023 guidance to a range of $3.95 million and $4.1 million. Guidance for 2024 calls for a range of $3.7 million and $4.1 million for the full year.
But VST stock continues to be a solid winner, up 61% this year and with a dividend yield of more than 2%. Vistra gets an “A” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had long positions in ENIC and CWCO. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
