Utilities at large (XLU) are aiming for an earnings growth of 4%–6% annually for the next few years. In comparison, NextEra Energy (NEE), the fastest-growing top utility, aims to increase its EPS by 6%–8% through 2021. It has increased its EPS ~8% compounded annually in the last ten years.

NextEra Energy’s healthy combination of regulated and competitive operations and unmatchable renewables portfolio drove its earnings in the last few years. It’s the most important territorial monopoly in Florida, one of the fastest growing states. The planned asset sale of Southern Company’s (SO) assets is expected to make NextEra Energy’s footprint even stronger in Florida.

Top Utilities’ Earnings Outlook and Growth Prospects

Regulated utilities

Regulated utilities Southern Company (SO) and Duke Energy (DUK) aim for an earnings growth of 4%–6% over the last few years, which is in line with the industry average. Both of them generate nearly all of their profits from regulated operations, which generally facilitates stable dividends. Recently, more than double the project costs at SO’s Vogtle plant became a headache for management as well as its investors.

The third-largest utility by market cap, Dominion Energy (D), aims to grow its EPS 6%-8% over the next few years, which is higher than the industry average. Above-average customer growth in growing states such as Virginia and North Carolina and diversified operations, from electric to midstream, are expected to drive Dominion Energy’s earnings growth going forward.

Dominion stock has significantly underperformed its peers after its agreement to buy SCANA (SCG) early this year. The acquisition received an approval from the United States Nuclear Regulatory Commission on September 4.

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