Jefferies Loves 5 Dividend-Paying Utility Stocks but Warns of Caution on the Sector

Core Viewpoint - Jefferies expresses a positive outlook on five dividend-paying utility stocks while cautioning about potential regulatory and political challenges in the sector due to upcoming elections [1]. Group 1: Sector Overview - The utility sector has seen a significant increase, with a nearly 21% gain from its low in April 2025, driven by rising electricity demand from data centers [1]. - Despite the positive start to 2026, investor concerns have emerged due to unfavorable regulatory and political developments, particularly with 36 gubernatorial elections expected [1]. - Jefferies highlights that utility stocks are likely to perform better than high-flying technology stocks during potential market declines [1]. Group 2: Recommended Utility Stocks - Ameren Corp. (NYSE: AEE): Offers a 2.69% dividend; operates in four segments including electric and natural gas distribution. Jefferies target price is $124 [1]. - CenterPoint Energy Inc. (NYSE: CNP): Provides a 2.16% dividend; operates electric and natural gas distribution services. Jefferies target price is $44 [1]. - Entergy Corp. (NYSE: ETR): Engaged in electric power production with a 2.48% dividend; operates in the Deep South. Jefferies target price is $114 [2]. - NiSource Inc. (NYSE: NI): Offers a 2.55% yield; operates natural gas distribution in several states. Jefferies target price is $49 [2]. - One Gas Inc. (NYSE: OGS): Provides a 3.32% dividend; focuses on natural gas distribution across multiple states. Jefferies target price is $95 [2].