4 Utility Stocks to Buy on Impending Rate Cuts

Industry Overview - The utilities sector serves as a fallback option for investors during recessions due to its reputation for rewarding shareholders with dividends, but it tends to fall out of favor during economic growth periods when growth stocks dominate the market [1] - Utility sector stocks are defensive in nature and are minimally affected by market volatility, having shown resilience even during the 2008 global economic crisis [2] - The sector has performed well in 2024, with the S&P 500 Select Sector SPDR (XLU) advancing 22.4% year to date as of August 31, 2024 [5] Economic Context - The market anticipates interest rate cuts in September, marking the first loosening of monetary policy since early 2022, with expectations of at least two rate cuts this year [3] - Inflation has significantly cooled, reaching a 43-month low at 2.5% year over year in August, while the jobs market remains robust [4] Investment Opportunities - Utilities are considered long-term buy-and-hold options due to regular dividend declarations and generally higher dividend yields compared to other equities, providing stability and growth potential [6] - DTE Energy Company (DTE) has an expected earnings growth rate of 16.9% for the current year and a Zacks Rank of 2 [8] - UGI Corporation (UGI) has an expected earnings growth rate of 3.2% for the current year and a Zacks Rank of 2 [9] - Northwest Natural Holding Company (NWN) has an expected earnings growth rate of 26.3% for the next year and a Zacks Rank of 2 [10] - Veolia Environnement SA (VEOEY) has an expected earnings growth rate of 207% for the current year and a Zacks Rank of 2 [11]