3 Stocks to Buy From the Prospering Electric Power Industry

Industry Overview - The Utility – Electric Power industry is transitioning to cleaner fuel sources and reducing carbon emissions, supported by government policies promoting sustainable power generation [1] - Utilities are investing in grid upgrades and improving transmission and distribution infrastructure to enhance resilience against severe weather events [1][3] - The industry is experiencing stable demand across economic cycles, with increased electricity consumption during extreme weather [3] Trends Impacting the Industry - Interest rates have declined from 5.25-5.50% to 4.25-4.50%, benefiting capital-intensive utilities by lowering borrowing costs for infrastructure investments [4] - Electricity production is projected to increase by 2.2% in 2025 and 2.3% in 2026, reaching 4,340 billion kilowatt-hours, driven by demand from commercial and industrial sectors [5] - The share of electricity generation from renewable sources is expected to rise from 23% in 2024 to 26% in 2026, aided by the Inflation Reduction Act [6] Company Highlights - CenterPoint Energy Inc. plans to invest $53 billion over the next 10 years to expand operations and meet rising electricity demand [19] - Fortis Inc. expects to invest $26 billion from 2025 to 2029, focusing on strengthening regulated electric and gas operations [23] - NiSource Inc. projects an investment of $19.4 billion for 2025-2029 to enhance its existing operations [27] Financial Performance and Valuation - The Utility Electric Power industry has gained 16.9% over the past 12 months, outperforming its sector's 14.2% increase but lagging behind the S&P 500's 22.7% gain [10] - The industry is currently trading at an EV/EBITDA of 14.37X, lower than the S&P 500's 17.02X and the Utility sector's 15.75X [13] - Long-term earnings growth estimates for CenterPoint Energy, Fortis, and NiSource are 7.8%, 5.13%, and 7.88% respectively, with respective dividend yields of 2.3%, 3.53%, and 2.58% [20][24][28]