As macro headwinds keep the stock market volatile, utility stocks could be a solid addition to investors’ portfolios. Utility companies have a defensive business model backed by a regulated rate base (value of assets upon which utility companies earn revenue) and a reliable revenue stream. Leveraging TipRanks’ Experts Center, we have zeroed in on NextEra Energy (NYSE:NEE) and CenterPoint Energy (NYSE:CNP), which have received Buy recommendations from the top Wall Street analysts.
What is the Future of NEE?
NextEra Energy is America’s leading electric utility company that has received 11 unanimous Buys for a Strong Buy consensus rating. Further, analysts’ average price forecast of $95.73 on NEE stock implies 25.84% upside potential
It’s worth highlighting that NEE stock has received eight Buy recommendations from the top Wall Street analysts.
For instance, RBC Capital analyst Shelby Tucker (with a success rate of 71%) reiterated his Buy recommendation on NEE stock. Further, five-star analyst Shahriar Pourreza of Guggenheim (success rate of 72%) is also bullish about NEE’s prospects.
Analysts’ bullish view stems from NEE’s continued investment to expand the retail rate base, which will likely drive its revenue and earnings. Furthermore, NEE’s growing portfolio of clean energy assets positions it well to benefit from the Inflation Reduction Act (IRA).
Thanks to its resilient business, NEE’s adjusted EPS has increased at a CAGR of 10% in the past decade. Furthermore, it expects to grow its adjusted EPS at a CAGR of 6-8% through 2026.
NEE’s solid business model and growing earnings base will enable the company to boost its shareholders’ returns through higher dividend payments. NEE expects to increase its dividend by 10% annually, at least through 2024.
In addition, NEE offers a dividend yield of 2.23%. With positive indicators from analysts, hedge funds, and insiders, NEE has a maximum Smart Score of ‘Perfect 10’ on TipRanks.
What is the Projection for CNP Stock?
CenterPoint Energy is an electric and gas utility company. CNP stock has received six Buys and two Holds for a Strong Buy consensus rating. Further, analysts’ average price target of $32.71 implies 11.98% upside potential.
CNP has four Buy recommendations from top analysts. Besides for Tucker and Pourreza, Wells Fargo analyst Sarah Akers (with a success rate of 66%) and Mizuho Securities analyst Anthony Crowdell (success rate of 60%) reiterated the Buy recommendation on CNP stock
Thanks to its strong business model, CNP targets 8% annual growth in its adjusted EPS in 2023 and 2024. Moreover, it expects EPS to grow at a CAGR of 6-8% after that through 2030.
This increased visibility over its earnings, multi-billion dollar capital plan and strong balance sheet augur well for future growth. Overall, CNP stock has an Outperform Smart Score of nine.
Bottom Line
The resilient business model, strong earnings growth outlook, positive indications from analysts, and Outperform Smart Score make NEE and CNP attractive investments in the utility space.
