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4 Low-Beta Utility Stocks to Buy as Fed Keeps Interest Rates Steady
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Key Takeaways
The Fed held rates steady, sparking a market pullback and renewed investor caution.
Stocks like OGS and NWN offer low-beta stability with improved earnings estimates and solid dividend yields.
FTA, NWN, IDA and OGS show growth potential amid inflation concerns and delayed rate-cut decisions.
Wall Street retreated sharply from its earlier highs on Wednesday after the Federal Reserve left interest rates steady. The move was expected, but stocks still had to bear the brunt as the recent investor optimism soon faded after the announcement, with volatility returning to Wall Street.
Also, the deadline for President Donald Trump’s temporary halt on tariffs is nearing, and investors are uncertain about how it will impact the economy, which may trigger fresh bouts of market volatility.
Also, these stocks are from the low-beta category (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high dividend yield and a favorable Zacks Rank.
Fed Leaves Interest Rates Unchanged
The Federal Reserve left interest rates unchanged in its current range of 4.25-4.50% at the end of its two-day FOMC meeting on Wednesday. Fed Chairman Jerome Powell said that the central bank was still not ready to cut interest rates.
The decision was highly anticipated, but investors were hopeful that if not in July, the Federal Reserve would cut interest rates in its September meeting. However, Powell dampened their spirits by saying that the Federal Reserve has “made no decisions” about a rate cut in September.
The S&P 500 fell 0.1%, while the Dow shed more than 150 points, giving up 0.4% after Powell’s post-meeting press conference.
“Our obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem,” Powell said.
Inflation Worries Delaying Rate Cuts
Higher tariffs have already started showing their impact, with prices of goods rising over the past couple of months. The White House has been holding trade talks with several nations before the deadline for new tariffs ends on Aug. 1.
Also, inflation rose in June, which experts believe was primarily due to the higher tariffs. The Federal Reserve is delaying its cuts as it wants to watch the overall effects on economic activity and inflation.
Higher borrowing rates for a longer period can weigh on the broader economy and could keep markets volatile for a longer period.
4 Low-Beta Defensive Stocks With Growth Potential
ONE Gas, Inc.
ONE Gas, Inc. is a 100% regulated natural gas distribution utility. OGS provides natural gas distribution services to more than 2.3 million customers in Oklahoma, Kansas and Texas.
ONE Gas has an expected earnings growth rate of 9.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 60 days. The company has a beta of 0.80 and a current dividend yield of 3.68%.
Fortis, Inc.
Fortis, Inc. is engaged in the electric and gas utility business. FTS offers regulated utilities comprising electric and gas, as well as engages in non-regulated hydroelectric operations. Fortis operates primarily in Canada, the United States and the Caribbean.
Fortis has an expected earnings growth rate of 4.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days. Fortis has a beta of 0.48 and a current dividend yield of 3.63%.
Northwest Natural Holding Company
Northwest Natural Holding Company builds and maintains natural gas distribution systems, as well as invests in natural gas pipeline projects through its subsidiaries. NWN serves residential, commercial and industrial customers primarily in the United States, Canada and Service Territory.
Northwest Natural Holding Company has an expected earnings growth rate of 23.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 60 days. Northwest Natural Holding Company has a beta of 0.53 and a current dividend yield of 4.83%.
IDACORP, Inc.
IDACORP, Inc. is engaged in the transmission, distribution and sale of electricity services in southern Idaho and eastern Oregon through its primary subsidiary Idaho Power Company (Idaho Power).
IDACORP has an expected earnings growth rate of 6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. IDACORP has a beta of 0.56 and a current dividend yield of 2.81%.
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4 Low-Beta Utility Stocks to Buy as Fed Keeps Interest Rates Steady
Key Takeaways
Wall Street retreated sharply from its earlier highs on Wednesday after the Federal Reserve left interest rates steady. The move was expected, but stocks still had to bear the brunt as the recent investor optimism soon faded after the announcement, with volatility returning to Wall Street.
Also, the deadline for President Donald Trump’s temporary halt on tariffs is nearing, and investors are uncertain about how it will impact the economy, which may trigger fresh bouts of market volatility.
Given the uncertainty, it would be ideal to invest in safe-haven defensive stocks from the utility sector, such as ONE Gas, Inc. (OGS - Free Report) , Fortis, Inc. (FTS - Free Report) , Northwest Natural Holding Company (NWN - Free Report) and IDACORP, Inc. (IDA - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Also, these stocks are from the low-beta category (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high dividend yield and a favorable Zacks Rank.
Fed Leaves Interest Rates Unchanged
The Federal Reserve left interest rates unchanged in its current range of 4.25-4.50% at the end of its two-day FOMC meeting on Wednesday. Fed Chairman Jerome Powell said that the central bank was still not ready to cut interest rates.
The decision was highly anticipated, but investors were hopeful that if not in July, the Federal Reserve would cut interest rates in its September meeting. However, Powell dampened their spirits by saying that the Federal Reserve has “made no decisions” about a rate cut in September.
The S&P 500 fell 0.1%, while the Dow shed more than 150 points, giving up 0.4% after Powell’s post-meeting press conference.
“Our obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem,” Powell said.
Inflation Worries Delaying Rate Cuts
Higher tariffs have already started showing their impact, with prices of goods rising over the past couple of months. The White House has been holding trade talks with several nations before the deadline for new tariffs ends on Aug. 1.
Also, inflation rose in June, which experts believe was primarily due to the higher tariffs. The Federal Reserve is delaying its cuts as it wants to watch the overall effects on economic activity and inflation.
Higher borrowing rates for a longer period can weigh on the broader economy and could keep markets volatile for a longer period.
4 Low-Beta Defensive Stocks With Growth Potential
ONE Gas, Inc.
ONE Gas, Inc. is a 100% regulated natural gas distribution utility. OGS provides natural gas distribution services to more than 2.3 million customers in Oklahoma, Kansas and Texas.
ONE Gas has an expected earnings growth rate of 9.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 60 days. The company has a beta of 0.80 and a current dividend yield of 3.68%.
Fortis, Inc.
Fortis, Inc. is engaged in the electric and gas utility business. FTS offers regulated utilities comprising electric and gas, as well as engages in non-regulated hydroelectric operations. Fortis operates primarily in Canada, the United States and the Caribbean.
Fortis has an expected earnings growth rate of 4.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days. Fortis has a beta of 0.48 and a current dividend yield of 3.63%.
Northwest Natural Holding Company
Northwest Natural Holding Company builds and maintains natural gas distribution systems, as well as invests in natural gas pipeline projects through its subsidiaries. NWN serves residential, commercial and industrial customers primarily in the United States, Canada and Service Territory.
Northwest Natural Holding Company has an expected earnings growth rate of 23.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 60 days. Northwest Natural Holding Company has a beta of 0.53 and a current dividend yield of 4.83%.
IDACORP, Inc.
IDACORP, Inc. is engaged in the transmission, distribution and sale of electricity services in southern Idaho and eastern Oregon through its primary subsidiary Idaho Power Company (Idaho Power).
IDACORP has an expected earnings growth rate of 6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. IDACORP has a beta of 0.56 and a current dividend yield of 2.81%.