Right now, the utility sector is in a pretty sweet spot, and I’ve got three solid, high-yield ways to jump in.
If you’ve ever dealt with a blackout, you know how crucial power is today. Interestingly, electricity’s role is only set to grow, with its share of U.S. energy use jumping from 21% to 32% by 2050. So, there’s a long-term play here, and I’ve got three angles to explore.
1. Dive in with a Broad Approach
First option? Not a stock, but an ETF: the Vanguard Utilities ETF (VPU). It offers a wide-ranging stake in the sector, with about 60% in electric utilities and 30% in multi-utilities and independent producers. This ETF centers on electricity and comes with a 2.7% yield—over double the S&P 500’s. It’s a hassle-free way to get into electricity without picking individual stocks, great for those who aren’t active investors.
Electric vehicles are forecasted to spike demand by 9,000% by 2050, especially in the Northeast and West. Meanwhile, data center demand could soar by 300%, mainly in the Mid-Atlantic and Texas. With so many factors in play, the Vanguard ETF helps you catch the broader trend without the stress of stock picking. Put down $500, and you’ve got about two shares of this utility ETF.
2. NextEra Energy’s Dividend Powerhouse
If dividends are your jam, check out NextEra Energy (NEE). It runs two big businesses: a regulated utility (Florida Power & Light) and a major solar and wind power provider. This dual approach is driving significant growth. The dividend yield here? About 3.1%, with a jaw-dropping 10% average annual growth over the past decade. Management plans to maintain this pace with projected earnings growth and dividend increases through at least 2027. Investing $500 gets you six shares.
3. Steady and Reliable with Black Hills
For a more stable option, Black Hills (BKH) might be your pick. This company manages natural gas and electric utilities across several states, serving around 1.35 million customers. With demand slated to rise, expect its dividend to keep climbing. Black Hills boasts 55 consecutive years of dividend growth, earning it “Dividend King” status, with a yield around 4.5%. Investing $500 nets you roughly eight shares.
An Opportunity Spanning Decades
For dividend hunters eyeing these high-yield prospects, remember, this isn’t a quick win. It’s a long-haul investment, so think in terms of decades, not days. Utilities may be slow-moving, but given how vital they are, they represent a potentially huge opportunity over time. If you’re ready to commit and hold onto your investment for a while, the Vanguard Utilities ETF, NextEra Energy, and Black Hills are all worth a look as electricity demand is poised for major growth.
