2 No-Brainer High Yield Utility Stocks to Buy Right Now

Industry Overview - The utility sector is experiencing a shift in demand, which is expected to boost growth in an industry traditionally viewed as stable and low-growth [1] - Energy demand is projected to increase significantly, with estimates rising from 22% growth between 2020 and 2040 to 55% growth by 2025, marking a substantial increase compared to the previous 20-year period [2] - Key drivers of this demand surge include artificial intelligence (AI), data centers, and electric vehicles (EVs), with demand from AI and data centers expected to rise by 300% and EV demand projected to increase by 9,000% by 2050 [3] Company Analysis: Dominion Energy - Dominion Energy has faced challenges, including a dividend cut while restructuring its asset portfolio to focus solely on electric utility operations [4] - The company is working on reducing leverage and aligning its payout ratio with industry peers, currently offering a dividend yield of 4.7%, significantly higher than the average utility yield of 2.9% [6] - Dominion holds a monopoly in a major data center market, experiencing strong demand for power, and is expected to achieve annual earnings growth of 5% to 7% due to this demand and a large offshore wind project [7] - Investors can benefit from above-average yields while awaiting dividend growth, which could lead to a higher stock premium once dividends are restored [8] Company Analysis: Black Hills - Black Hills has a strong dividend history, having increased its dividend annually for 55 consecutive years, earning the title of Dividend King [9] - Despite its small market cap of $4 billion, Black Hills offers a high dividend yield of 4.6% and is positioned to benefit from increasing demand in its service markets, projecting earnings growth of 4% to 6% annually [10] - The company represents a stable investment option in the utility sector, appealing to investors seeking consistent returns in a regulated industry [11]