For Immediate Release
Chicago, IL – March 30, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Portland General Electric Company (
POR Quick Quote POR - Free Report) , Avangrid, Inc. ( AGR Quick Quote AGR - Free Report) and Avista Corporation ( AVA Quick Quote AVA - Free Report) . Here are highlights from Monday’s Analyst Blog: 3 Electric Utilities that Outperformed the S&P Mark YTD
Electricity demand from the commercial and industrial (C&I) group remained dampened for 2020 due to the COVID-19 outbreak. With the resumption of economic activities, demand from C&I is likely to witness growth this year while residential demand is expected to continue seeing an upward trend.
Per U.S. Energy Information Administration (EIA), electricity consumption will improve 2.1% in 2021 and another 1.4% in 2022 after dipping 3.8% in 2020. Also, EIA expects demand from the residential sector to inch up 2.7% and that from the commercial and industrial sectors to increase 0.7% and 3.7%, respectively, in 2021. This is a very positive development for the utilities and the companies in this space will definitely benefit from the revival of demand.
Along with growth in demand, economic recovery will help these companies' operational efficiency reach the pre-pandemic levels. Per Fitch Ratings, U.S. GDP is now anticipated to expand 6.2% this year (up from December 2020's expectation of 4.5%), marginally greater than the global GDP figure.
Also, the Federal Reserve expects the unemployment rate to fall from the current figure of 6.2% to 4.5% by 2021 end and again to 3.9% by the close of 2022 with the uptick in economy. The improving economic parameters will logically spur demand.
A transition toward clean sources of energy is already evident in the United States with a number of utilities on their own deciding to become carbon neutral over the next two decades. Moreover, the new government targets building a carbon-free electricity sector by 2035 and achieve net-zero emissions 15 years later.
Environmental sustainability remains a peak concern for this industry. Per EIA, renewable energy generation will account for 21% in 2021 and 23% in 2022, up from 20% in 2020.
Use of high-quality solar modules, large wind blades and the development of large battery storage projects are making renewable energy more reliable and cost-effective. Being capital-intensive in nature, utilities face a constant stress of procuring funds.
The current near-zero interest rates will assist the utilities to get the necessary investments at favorable rates. Also, the Fed plans to maintain these rates through 2023 to help the economy rebound from the damages caused by the pandemic.
Apart from the above-mentioned factors, companies from this industry seem an attractive option for investors as they continue to boost shareholder value via regular dividends on the back of stability in earnings. Remarkably, the industry's dividend yield is 3.35%, better than the Zacks S&P 500 composite's 1.38% at present.
The electric utilities' focus on domestic operations alongside being subject to stern regulations helped them counter the pandemic-led chaos. These utilities will also continue benefiting from rate revision and their efforts to manage costs.
3 Utility Picks
We picked a few stocks from the industry that have returned more than the Zacks S&P 500 composite's 4.4% growth in the year-to-date period. These stocks carry a Zacks Rank #3 (Hold) or above at present. You can see
t. he complete list of today's Zacks #1 Rank (Strong Buy) stocks here
These companies pay regular dividends to shareholders and have better dividend yields compared with the industry average of 3.35%. We added some more criteria for the selection of utilities from our proprietary
Zacks Stock Screener. Portland General Electric is a fully integrated energy company with operations across Oregon. The utility serves 900,000 customers with a service area population of 2 million Oregonians in 51 cities. It carries a Zacks Rank #2 (Buy) at present.
Year-to-Date Return =10.9%
Dividend Yield =3.44%
Long-Term Earnings Growth (three to five years) = 13.36%
Estimate Movement =The Zacks Consensus Estimate for 2021 earnings has moved 1.5% up to $2.67 in the past 60 days.
Avangrid is an energy services and delivery company, serving 3.1 million customers throughout the state of New York and New England. It carries a Zacks Rank #3 at present.
Year-to-Date Return =7.7%
Dividend Yield =3.60%
Long-Term Earnings Growth (three to five years) = 4.60%
Estimate Movement =The Zacks Consensus Estimate for 2021 earnings has moved 0.9% north to $2.24 in the past 60 days.
Avista Corp. is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. It carries Zacks Rank of 3 at present.
Year-to-Date Return =19.5%
Dividend Yield =3.53%
Long-Term Earnings Growth (three to five years) = 6.88%
Estimate Movement =The Zacks Consensus Estimate for 2021 earnings has been revised 2% upward to $2.09 in the past 60 days.
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