Which Utility Stock Offers the Highest Potential Gain—NEE, DUK, or SO?
Now that we’ve discussed where the top utilities’ dividend profiles stand next to one other, let’s look at the price targets from Wall Street analysts.
NextEra Energy (NEE) stock leads the pack (in our group of the four biggest utilities in SPX by market capitalization), with an estimated gain of 6.3% going forward. According to the Wall Street analyst estimates, NextEra Energy has a mean price target of $155.7, compared with its current market price of $146.4.
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Southern Company (SO) has an estimated gain of 5.3%, compared with its current market price of $48.8. Analysts have given SO stock a price target of $51.4, but the stock has been weak so far this year, mostly due to power plant snags. (You can read more about this in Market Realist’s series How to Read Southern Company’s Power Plant Plight.)
Duke Energy (DUK) has a mean price target of $86.0, compared with its current market price of $84.3, which implies an estimated gain of 2.1% going forward.
Dominion Energy (D), one of the fastest-growing utilities in the sector, has a mean price target of $80.3, which indicates a possible gain of 4.3%, compared with its current market price of $77.04.
Although NextEra Energy is now trading at a lower dividend yield, its dividend growth is much higher than those of peers and is likely due to its financial strength.
Although NEE yields lower, its relatively higher earnings growth has likely contributed to its epic ascent recently. With its higher expected earnings growth, it could generate high capital gains for investors—if the stock continues to outperform peers.
You can read a comparative analysis of the ten top-yielding SPX utilities in Market Realist’s series Sector Scan: The 10 Top-Yielding SPX Utility Stocks.