The utility sector has long been a safe harbor for investors seeking stability, offering essential services and steady revenue streams. Unlike cyclical industries, utilities benefit from consistent demand and regulated pricing, making them resilient even during periods of market volatility.
As the sector evolves with efficiency initiatives and growing energy needs, fundamentally strong stocks like Duke Energy Corporation (DUK), ONEOK, Inc. (OKE), and Entergy Corporation (ETR) could be solid additions to your portfolios for long-term growth.
While utilities lagged in 2023, the sector has made an impressive comeback in the latter half of 2024. One of the biggest catalysts driving utility stocks higher is the surging demand for electricity, particularly from artificial intelligence (AI) and data centers. The increasing adoption of AI-driven technologies requires significant computational power, primarily housed in energy-intensive data centers.
As a result, electricity demand, which had been growing at a modest 1% to 2% annually over the past decade, is now projected to expand at a much faster rate of 6% to 8% per year over the next 10 years. Moreover, the rise of manufacturing onshoring, increased electrification, and new energy infrastructure investments are fueling a surge in electricity demand.
To meet these needs, utilities are rapidly expanding their infrastructure while maintaining a balance between affordability and sustainability. Government initiatives such as the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) are providing financial support, helping utilities modernize their grids and transition toward cleaner energy sources.
With the global utilities market projected to reach $9.21 trillion by 2029, growing at a CAGR of 6%, the sector’s future appears promising. This growth is driven by rising energy needs, a growing global population, economic development, and increased investment in renewable energy.
These tailwinds, coupled with the sector’s reputation for reliable dividend payouts, make utility stocks an attractive option for investors looking for both income and long-term capital appreciation. Now, let us dive deep into the fundamentals of three Utilities – Domestic stocks, beginning with the third choice.
Stock #3: Entergy Corporation (ETR)
ETR is an integrated energy company that generates, transmits, and distributes electricity to three million customers across Arkansas, Louisiana, Mississippi, and Texas, including New Orleans. With a 24,000 MW power generation capacity, it operates gas, nuclear, coal, hydro, and solar facilities. It also owns non-nuclear power assets, sells electricity to wholesale customers, and provides decommissioning services for nuclear plants.
On February 26, ETR received final approval to sell its gas distribution business to Delta Utilities, with the transaction expected to close by late summer 2025. This move aligns with the company’s strategy to focus solely on its regulated electric utility business.
In the same month, the company secured approval for its Power Through backup generation program from the Public Utility Commission of Texas. The initiative will provide whole-facility backup power at a lower cost, with ETR handling maintenance at no extra charge. This program is expected to enhance reliability and affordability for businesses and communities in Southeast Texas.
On January 31, the company’s board of directors declared a quarterly dividend of $0.60 per share, payable to its shareholders on March 3, 2025. With 10 years of consecutive dividend growth, ETR pays an annual dividend of $2.40, which translates to a yield of 2.79% at the current share price. Its four-year average dividend yield is 3.79%. Moreover, ETR’s dividend payouts have increased at an impressive CAGR of 5.9% over the past three years. Also, it has a payout ratio of 63.2%.
During the fiscal fourth quarter (ended December 31, 2024), ETR’s operating revenues increased marginally year-over-year to $2.74 billion. It reported an operating income of $669.62 million, indicating a 161% growth from the prior year quarter. Moreover, the company’s attributable net income and EPS for the quarter amounted to $286.45 million and $0.65, respectively.
The consensus revenue estimate of $3.21 billion for the fiscal first quarter (ending March 2025) represents a 14.7% increase year-over-year. The consensus EPS estimate of $0.64 for the same period indicates an 18% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 72.6% over the past year to close the last trading session at $86.15.
ETR’s strong prospects are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
ETR has an A grade for Growth and a B for Momentum. It is ranked #25 among 59 stocks in the Utilities – Domestic industry. To see the other ratings of ETR for Value, Stability, Sentiment, and Quality, click here.
Stock #2: Duke Energy Corporation (DUK)
DUK, through its subsidiaries, operates as an energy company in two segments: Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I). Its electric utilities serve 8.4 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio, and Kentucky and collectively own 54,800 megawatts of energy capacity.
On February 21, the company announced its plans to invest $521 million in four new solar sites: Sundance, Half Moon, Rattler, and Bailey Mill Renewable Energy Centers. These projects are expected to save customers $843 million over their service lifetimes.
Currently, Duke Energy Florida operates 25 solar sites generating 1,500 megawatts of energy. Between 2025 and 2027, the company plans to build 12 additional sites, adding 900 megawatts to the electric grid. By 2033, its total utility-scale solar capacity is projected to exceed 6,100 megawatts, reinforcing its leadership in clean energy.
In the same month, DUK introduced free home and business energy assessments alongside money-saving rebate programs for customers in Florida. These initiatives aim to help customers reduce their electricity bills while strengthening the company’s customer retention and growth.
DUK pays an annual dividend of $4.18, which translates to a yield of 3.59% at the current share price. Its four-year average dividend yield is 3.97%. The company has an impressive payout ratio of 70.2%. Moreover, it has a record of 14 years of consecutive dividend growth.
For the fiscal fourth quarter that ended December 31, 2024, DUK’s total operating revenues increased 2.1% year-over-year to $7.36 billion. Its operating income rose 13.8% from the year-ago value to $2.11 billion. Moreover, the company’s adjusted earnings amounted to $1.28 billion and $1.66 per share, indicating an increase of 9.3% and 9.9% year-over-year, respectively.
Street expects DUK’s EPS for the first quarter (ending March 2025) to increase 3.9% year-over-year to $1.50, while its revenue is estimated to grow marginally from the prior year period to $7.73 billion. Furthermore, DUK topped the consensus EPS and revenue estimates in three of the trailing four quarters, which is promising.
Shares of DUK have surged 28.3% over the past year and 7.9% year-to-date to close the last trading session at $116.31.
DUK’s stance is reflected in its POWR Ratings. It has a B grade for Momentum and Stability. Within the same industry, it is ranked #20.
In addition to the POWR Ratings highlighted above, you can check DUK’s rating for Growth, Value, Sentiment, and Quality here.
Stock #1: ONEOK, Inc. (OKE)
OKE engages in gathering, processing, fractionating, storing, transporting, and marketing natural gas and natural gas liquids (NGL) in the United States. It operates through four segments: Natural Gas Gathering and Processing; Natural Gas Liquids; Natural Gas Pipelines; and Refined Products and Crude.
On February 14, the company paid its shareholders a quarterly dividend of $1.03 per share, reflecting an increase of 4%. OKE’s annual dividend is $4.12, which translates to a yield of 4.30% at the current share price, and its four-year average dividend yield is 5.71%. Moreover, the company’s dividend payouts have increased at a CAGR of 2.3% over the past three years. Also, it has a payout ratio of 77.4%.
In addition, the company has repurchased 1.675 million shares of its outstanding common stock for $171.70 million as part of its $2 billion share repurchase program, which it plans to execute over the next three years. These initiatives underscore OKE’s strong financial position and commitment to delivering value to investors.
On February 4, OKE announced a joint venture with MPLX LP (MPLX) to construct a new large-scale 400,000-barrel per day liquefied petroleum gas export terminal in Texas City alongside a new 24-inch pipeline connecting the company’s Mont Belvieu storage facility to the terminal. The $1.4 billion export terminal, owned equally by OKE and MPLX, is expected to be completed by early 2028, leveraging Marathon’s existing infrastructure for cost efficiency.
Additionally, OKE will own 80% of the pipeline joint venture, which has a total investment of $350 million, further reinforcing its position in the energy export market.
On January 31, OKE completed the $4.3 billion acquisition of EnLink Midstream, LLC, using common stock. This transaction strengthens its integrated midstream business, enhances operational synergies, and broadens its asset base, positioning the company for long-term growth.
In the fiscal 2024 fourth quarter that ended December 31, OKE’s total revenues increased 33.7% year-over-year to $7 billion. Its operating income grew 42.7% from the year-ago value to $1.57 billion. The company’s attributable net income amounted to $923 million, reflecting an increase of 34.2% over the prior-year period. Also, its earnings per common share for the quarter stood at $1.57, up 33.1% year-over-year.
Analysts expect OKE’s revenue for the first quarter (ending March 2025) to increase 53.8% year-over-year to $7.35 billion. Meanwhile, its EPS for the same period is expected to register a year-over-year growth of 19.7%, settling at $1.31.
Over the past year, the stock has gained 31.3%, closing the last trading session at $95.76.
OKE’s POWR Ratings reflect its outlook. It has an A grade for Momentum and a B for Growth. Out of 59 stocks in the Utilities – Domestic industry, it is ranked #19.
Click here to access the additional OKE ratings (Value, Stability, Sentiment, and Quality).
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DUK shares were trading at $116.47 per share on Thursday afternoon, up $0.16 (+0.14%). Year-to-date, DUK has gained 9.10%, versus a 1.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta’s profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More…