NextEra Energy (NEE), NiSource (NI), and CMS Energy (CMS) have beaten their peers as well as the broader markets in terms of total returns in the last five years. Investors generally take shelter under utilities amid volatile markets due to their high dividend-paying capabilities.
These three top-performing utilities have recorded relatively high earnings growth for the last several years, positively influencing their market performances.
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NextEra Energy’s EPS have risen ~8% compounded annually in the last five years, far higher than utilities’ average. Its unmatched renewables portfolio and large regulated operations in premium markets such as Florida have driven its earnings growth in the last few years. The company’s management expects superior earnings growth to continue for it over the next few years. Utilities (IDU) at large have experienced earnings growth of ~4% compounded annually in the last few years.
NiSource and CMS Energy have also recorded higher earnings growth than the industry average in the last few years.
The chart above shows a comparison of the stock price movements of the three above-mentioned utilities over the last five years. As we can see, these stocks have significantly outpaced broader utilities (XLU) in the period. More than stable dividends, robust market performances have heavily contributed to these utilities’ total returns.