Top Utility Stocks from Josh Brown’s List Offer Steady Returns for Cautious Investors

Think of investing like planting a garden. You want seeds that will grow strong, survive storms, and maybe even surprise you with bright flowers. Today, let’s talk about some “seeds” in the utility sector—companies that keep the lights on and are now growing in new, exciting ways.

Why Utilities Matter for Investors

Utilities might seem boring, but they’re the backbone of modern life. When these companies do well, they can offer steady returns and sometimes even a little extra growth, especially when they invest in things like clean energy. For investors, this means a chance to add stability to your portfolio while still having opportunities for growth.

Bulls: Why Some Investors Are Excited

• NextEra Energy (NEE): This company is like a two-in-one deal. It runs Florida’s biggest power company and is also the world’s largest producer of renewable energy from wind and solar. NextEra’s earnings grew 8% in the last year, and management thinks it can keep growing profits by more than 8% a year through 2032. Plus, it pays a 2.7% dividend, meaning you get paid while you wait for the stock to grow.
• Duke Energy (DUK): Duke serves over 8 million customers and expects to grow profits by 5%-7% each year. It pays a 3.4% dividend. While its stock price has been flat, steady growth in its business could mean better days ahead.
• FirstEnergy (FE): This company powers homes in Ohio, Pennsylvania, and more. It reported strong results last year, with profits up 7.6% and revenue jumping 12%. FirstEnergy plans to keep investing in its network, aiming for 10% growth in the value of its assets each year. Its recent stock price has moved up, breaking out of a long, flat period—a sign that big investors are paying attention.

Bears: Risks and Things to Watch Out For

• Stock Price Swings: Even safe-looking stocks can fall if they miss earnings or if investors get nervous. For example, Duke Energy had a false breakout last year and dropped, teaching investors to be careful and use stop-losses.
• Support Levels Matter: With NextEra and FirstEnergy, their recent gains depend on staying above certain price levels. If they fall below those prices, it could mean trouble, and the uptrend might end.
• Sector Rotation: Sometimes, investors move money out of utilities and into other sectors like tech or healthcare, which can hurt utility stock prices even if the companies are doing well.

How Utilities Stack Up Historically

Utilities have long been seen as “steady Eddies” in the market. According to S&P Global, the utilities sector has averaged a 9% annual return over the past 30 years, balancing out riskier sectors. But today, with the push for clean energy, companies like NextEra are blending stability with real growth potential—a rare combination.

What Makes These Utilities Stand Out?

• Growth and Stability: NextEra, Duke, and FirstEnergy all have steady businesses but are also investing in new technology and clean energy, which could boost their profits more than traditional utilities.
• Dividends: All three pay regular dividends, which can help investors ride out market ups and downs.
• Breaking Out: NextEra and FirstEnergy are seeing their stock prices break out of long holding patterns, which sometimes signals the start of a new growth phase.

Investor Takeaway

• Consider Adding Utilities: If you want stability plus some growth, these utility stocks could be a smart way to balance your portfolio.
• Watch Key Price Levels: Pay attention to support zones—if prices dip below them, it might be time to rethink your position.
• Look for Dividends: The steady income from dividends can cushion you during tougher market times.
• Diversify: Don’t put all your eggs in one basket. Mix utilities with other sectors to lower your risk.
• Stay Informed: Keep up with earnings reports and sector trends. The utility sector is changing fast with clean energy, and being in the know can help you make better choices.

For the full original report, see CNBC