Welcome to Extreme Investor Network, where we provide unique and valuable insights into the world of investing. Today, we are looking at the top performing sector in the S & P 500 in 2024 – utilities. Traditionally favored by retirees for their dividends, utilities have seen a surge of 20% this year, making them a hot topic on Wall Street.
Investors are flocking to utilities tied to powering data centers behind artificial intelligence, as the demand for electricity in these centers is expected to skyrocket. In fact, data centers may require up to 400 terawatt hours of electricity by 2030, according to Mizuho Securities.
Another tailwind for utilities is the anticipation of falling interest rates. As interest rates are projected to decrease to 3.25% by 2025, dividend yields from utilities and real estate investment trusts are becoming more attractive. This presents a unique opportunity for investors to capitalize on these changing market conditions.
Some of the top utilities that have caught the attention of Wall Street analysts include CMS Energy and NextEra Energy. CMS Energy, based in Jackson, Michigan, offers a dividend yield of 3.0% and has a 2024 total return of nearly 23%. The company’s focus on data centers and electric vehicle charging stations positions it well for future growth.
NextEra Energy, headquartered in Juno Beach, Florida, has a total return of nearly 38% year to date and a dividend yield of 2.5%. The company’s strong performance in the second quarter, driven by partnerships with data center customers like Google, has caught the eye of analysts at Morgan Stanley.
In addition to CMS Energy and NextEra Energy, other utilities like PPL and Sempra have also made CNBC Pro’s list of top performers. With attractive dividend yields and solid total returns, these companies are worth considering for investors looking to capitalize on the growth in the utilities sector.
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