Investing
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Markets are a bit of a volatile mess.
While the Dow Jones is up about 12 points, the tech-heavy NASDAQ is down about 315—all thanks to concerns about tariffs, which are expected to kick in this Wednesday.
Key Points About This Article
- Dividend-paying utility stocks like Exelon are safer defensive stocks thanks to strong cash flows and yields.
- American Electric Power could test higher highs thanks to strong electricity demand, especially with the growing need for data centers.
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However, even with the chaos, there are pockets of strength – especially in defensive, dividend-paying utility stocks.
Look at Exelon, for example.
Defensive utility stock, Exelon (NASDAQ:EXC) is up about $1.25 on the day.
Helping, Argus just raised its price target on EXC to $48. UBS raised its price target to $47 while Morgan Stanley raised its target to $48. Even better, the company has a history of impressive growth, with fourth-quarter EPS of 64 cents beating estimates by five cents. Revenue of $5.47 billion, up about 2% year over year, beat by $30 million. Plus, it just declared a first-quarter dividend of 40 cents, which was paid on March 14.
We also have to consider that dividend-paying utility stocks like EXC are safer defensive stocks. All thanks to strong cash flows and yields.
“Utilities continue to grow their dividends at an impressive rate,” said Morningstar energy and utility analysts Travis Miller and Andrew Bischof. “Nearly all utilities have already announced dividend increases for 2025 or are on track to announce increases in the first quarter. We expect 5% median sector wide dividend growth in 2025.”
American Electric Power
With a yield of 3.41%, American Electric Power (NASDAQ:AEP) is another hot utility stock to keep an eye on. Up about $2.05, AEP is another strong defensive utility name with consistent dividend payouts. Its last quarterly dividend of 93 cents was paid on March 10 and is now the company’s 459th consecutive quarterly dividend since July 1910.
Last trading at $108.80, AEP is expected to push even higher thanks to strong, growing demand for electricity. Helping, the company serves about 5.6 million customers across 11 states and operates the nation’s biggest transmission network. That, and the rising number of data centers across the country are driving electricity demand even higher.
According to Seeking Alpha, “The company anticipates substantial growth driven by increased data center and industrial load demand, projecting 20 gigawatts of incremental load by 2030.”
Xcel Energy
Xcel Energy (NASDAQ:XEL) is also up on the day.
Another hot electricity and natural gas company to consider, XEL just raised its quarterly dividend to 57 cents, which is payable on April 20 to shareholders of record as of March 14.
“Today’s dividend increase of 4.1% marks the twenty-second consecutive year that Xcel Energy has increased its dividend. It signals the Board of Directors’ confidence in our long-term growth strategy, and is a result of continued operational excellence and financial strength,” said Bob Frenzel, chairman, president, and CEO of Xcel Energy, as quoted in a recent press release.
Helping, the company just posted ongoing earnings of $3.50 per share. That helped the company achieve its guidance range for the 20th consecutive year despite warmer weather, as noted by Seeking Alpha.
“Management reaffirmed 2025 ongoing earnings guidance of $3.75 to $3.85 per share, representing 7% growth from the midpoint of 2024 guidance. This is supported by strong projected rate base growth of over 9% annually over the next five years,” they added.
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