The Utility sector is an umbrella term denoting a group of companies dealing with residents, industries, businesses, and the government providing basic amenities like water, gas, electricity, dams, sewage, etc. The consistently growing demand for the services under the sector has contributed to the growth of utility stock prices over the years. This sector promises to bring massive profits to the investors, making way for shareholders to get significant dividends. Even though the operators in this sector are privately owned, profit-making companies also offer public services that regulate our daily lives. Without an iota of doubt, this helps the utility industry regulate heavily and generate relatively constant revenue.

In recent years, this sector has grown like never before and has brought forth great opportunities for investors to generate & multiply wealth. If you are planning to invest in the Utility sector, read this article to get an insight into the performance of the stocks and the prevailing utility stock prices. It will give you an overview of the current stock market situation and the latest trends. Read this guide thoroughly and invest your money wisely to get the maximum benefit from the prevailing utility stock prices and that in the foreseeable future. 

Utility Sector Market Share

In recent years, we have been moving towards relying more on renewable energy for a better world. Consequently, we are focused on discovering better resources to produce more wind, hydraulic and solar energy. The evident impact of this could be the increased demand & production of electricity, bringing a boom in the public utility sector and boosting stock prices enormously in the future. According to a Reportlinker utility market report, the global utility market is predicted to reach a whopping $5996.57 billion in 2025 from $4534.38 billion in 2021. On the other hand, the compound annual growth rate will grow at 7% by 2025. 

The utility industry in the U.S. has seen a growth in market size from $607.4bn in 2020 to $652.8bn in 2021. This has brought the growth of 7.5% for the industry. Every year between 2016 and 2021, the market is growing by 0.9%. If you look at these figures, it is clear that the utility sector in the United States is growing faster than the global utilitarian industry.

Utility Industry Trends In 2021

- FERC Allows Regulatory Competition To Consolidate The Sector-

The Federal Energy Regulatory Commission enacted a pivotal decision to strengthen the competitive utility industry and offer higher utility stock prices in 2021.

- Growth Of Utility Industry By Creating New Digital Infrastructures-

For aggregating and managing the resources, DER requires new infrastructures in 2021. They shifted the management load from commercial to primarily residential, solar, and electric vehicles.

- Development Of Mobile Battery Business Models-

The Utility sector is targeting to develop impressive business models around EVs and charging infrastructure in 2021. With the introduction of longer-range batteries, EV sales will boost and offer unprecedented growth in the sector. Needless to say, this will increase the inflow of opportunities and provide higher utility stock prices to the investors. 

- Increase In Number Of New Entrants With The Investment Of Oil Companies In Utility Sector-

An increase in renewable energy and clean technologies will engender the interest of various investors in the utility sector, including oil companies. Like the preceding years, the trend of oil company investment will continue, increasing the utility stock prices noticeably in the coming future. 

Reason Behind The Growth Of Utility Stock Prices Over Long Term

Since the last few decades, the sector has been doing extraordinarily well and has provided steady growth in utility stock prices. This sector is growing so tremendously, and experts predict that the graph will only move up in the coming years, for some obvious reasons. Here are some of the prominent reasons behind the increase. 

1. One of the reasons is the combination of utility factors and macroeconomic concerns. In the past years, the utility sector has increased its emphasis on macroeconomic issues focused on creating a sustainable environment. It started focusing on environmental and infrastructure investments, which helped the sector to improve its revenue growth.

2. The lack of income options with investors has also helped the utility stock prices to grow. Investors are using utility stocks as a substitute for bonds and other dividend-yielding funds. But with the significant appreciation and higher utility stock prices, the investors are happy and continuing their investments for the long term.

3. Strong fundamentals of the utility sector are another reason for the development. The companies in this sector have learned the importance of investment in pipes, pipelines, and power plants to grow their earnings rather than focusing on unregulated businesses. According to the previous market trends, it is believed that this kind of investment will help the company in obtaining 5-6% higher earnings in the foreseeable future.

Top Utility Stocks To Invest In (as of May 2021)

1. AMERICAN WATER WORKS

Market Cap: $28.11B

52-Week Range: 120.67 - 172.56

EPS: $3.95

Yield: 1.56%

Dividend: $0.60

Net Income: $709M

Revenue: $3.78B

2. SEMPRA ENERGY 

Market Cap: $41.01B

52-Week Range: 112.16 - 140.46

EPS: $13.15

Yield: 3.21%

Dividend: $1.10

Net Income: $2.08B

Revenue: $11.35B

3. ESSENTIAL UTILITIES INC.

Market Cap: $11.61B

52-Week Range: 38.28 - 48.89

EPS: $1.64

Yield: 2.11%

Dividend: $0.25

Net Income: $284.85M

Revenue: $1.46B

4. UGI Corporation

Market Cap: $9.37B

52-Week Range: 29.54 - 46.73

EPS: $4.23

Yield: 2.97%

Dividend: $0.34

Net Income: $532M

Revenue: $6.55B

5. EDISON INTERNATIONAL

Market Cap: $21.15B

52-Week Range: 48.47 - 66.68

EPS: $2.15

Yield: 4.72%

Dividend: $0.66

Net Income: $739M 

Revenue: $13.58B

6. CENTERPOINT ENERGY INC.

Market Cap: $14.48B

52-Week Range: 17.34 - 25.39

EPS: $1.07

Yield: 2.55%

Dividend: $0.16

Net Income: -$591M

Revenue: $7.42B

7. BROOKFIELD INFRASTRUCTURE PARTNERS

Market Cap: $22.58B

52-Week Range: 38.73 - 55.54

EPS: $0.42

Yield: 3.80%

Dividend: $0.51

Net Income: $141M

Revenue: $8.89B