ZACKSยท2025-06-05 14:26Industry Overview - The U.S. utilities sector has seen a significant rise in 2025, driven by macroeconomic, regulatory, and market-specific dynamics that have renewed investor interest [2] - The S&P 500 Utilities Select Sector SPDR (XLU) has advanced by 9% as of May 2025, indicating strong performance in the sector [2] - Falling treasury yields have enhanced the attractiveness of dividend-paying stocks, including utilities, as government bond yields become less competitive [3] Market Dynamics - The appeal of defensive stocks has increased due to ongoing concerns about inflation, potential Federal Reserve rate adjustments, and geopolitical instability [2] - The imposition of 25% tariffs on steel and aluminum imports has raised costs for essential materials in utility infrastructure, impacting supply chains and project expenses [4] - Despite tariff-related market uncertainties, investors continue to seek refuge in utility stocks, which are perceived as defensive havens [4] Company Highlights - Southwest Gas Holdings, Inc. (SWX) is a natural gas distributor with an expected earnings growth rate of 17.7% for the current year, and its earnings estimate has improved by 4.8% over the past 60 days [7] - New Jersey Resources Corporation (NJR) is also a natural gas distributor, with an expected earnings growth rate of 9.9% and a 2.9% improvement in earnings estimates over the past 60 days [8] - Telenor ASA (TELNY), a global telecommunications company, has an expected earnings growth rate of 17.1% and a 3.8% improvement in earnings estimates over the past 60 days [9] Investment Considerations - Utility stocks are generally viewed as long-term buy-and-hold options due to their regular dividend declarations and higher dividend yields compared to other equities [5] - The stocks of SWX, NJR, and TELNY benefit from investor rotation into stable, dividend-paying utility stocks, with strong growth and value indicators reflected in their VGM Scores and Zacks Ranks [10]