Infrastructure

Federal Reserve Won't Raise Rates: 4 Big Dividend Utility Stocks to Buy Now

NRG

This stock has been obliterated and may hold huge upside for aggressive accounts. NRG Energy Inc. (NYSE: NRG) is leading a self-described customer-driven change in the U.S. energy industry by delivering cleaner and smarter energy choices, while building on the strength of the nation’s largest and most diverse competitive power portfolio.

The company creates value through reliable and efficient conventional generation while driving innovation in solar and renewable power, electric vehicle ecosystems, carbon capture technology and customer-centric energy solutions. The company’s retail electricity providers serve almost 3 million residential and commercial customers throughout the country.

CEO David Crane recently was fired as the company looks to separate from the unprofitable home solar business that has been partially responsible for dragging the price down. In fact, the company is pursuing a sale that was announced last fall of a majority stake in a money-losing home solar business, a transaction that many feel could help to boost shares, as NRG returns to focusing on the core business.

Investors receive a 5.74% dividend. The $18 Deutsche Bank price target is less than the $19.21 consensus estimate. The stock closed Thursday at $10.10.

PPL

This utility beat third-quarter earnings expectations but came in a little light on the revenue side. PPL Corp. (NYSE: PPL) serves 321,000 natural gas and 397,000 electric customers in Louisville and 16 surrounding counties, as well as 543,000 customers in 77 Kentucky counties and five counties in Virginia. The company also provides electric delivery services to approximately 1.4 million customers in Pennsylvania and operates electricity distribution network for the Midlands, South West, and Wales in the United Kingdom.

In addition, PPL offers a range of customer-care and back-office services to competitive retail energy suppliers, including customer enrollments; contract management; electronic data exchange; simple and complex billing; and call center operations comprising telemarketing, payment processing and collections of overdue accounts.

It is one of the leading U.S. utility companies and plans to continue to increase regulated operations and lower earnings volatility attached to competitive operations. PPL raised cash and lowered debt late last year by selling some hydroelectric assets to NorthWestern energy.

Investors receive a solid 4.4% dividend. The Deutsche Bank price target is $36, the consensus target is $36.56, and PPL closed Thursday at $34.32.


The huge capital gains for the sector from the quantitative easing days may be in the rear-view mirror, that doesn’t change the upside potential for these top companies. Even with rate increases do hit the tape, they will remain small and very slow and should have a negligible effect. These top stocks make excellent additions to growth and income total return portfolios looking for safety now.