Top-yielding utility stocks notably lagged their peers that delivered maximum returns in the last five years. NextEra Energy (NEE), the biggest component of the Utilities ETF (XLU), had total returns of 130% in the last five years. NextEra Energy’s consistent and above-average earnings growth has influenced its stock performance and fueled its superior dividend growth in the last few years.
Superior earnings growth
In comparison, utilities at large returned 66%, while broader markets returned 60% during the same period.
Natural gas utility NiSource (NI) returned 128%, while mid-sized regulated utility Xcel Energy (XEL) returned 113% during the same period. More than consistent dividends, the stock performance during this period has been the main contributor to these utilities’ total returns. These utilities reported higher earnings growth than broader utilities’ average growth of 4%–6% in the last several years.
None of the above-mentioned utilities yield higher than utilities’ average yield of 3.3%. NextEra Energy yields 2.6%, while NiSource yields 2.9%. Xcel Energy stock offers a yield of 3%, while Ameren (AEE) yields 2.8%.