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Fed Leaves Interest Rates Unchanged: 4 Low-Beta Utility Stocks to Buy
ZACKSยท 2025-05-08 15:55
Group 1: Market Overview - Stocks experienced volatility as the Federal Reserve maintained interest rates in the range of 4.25-4.5% during its May FOMC meeting, amid high inflation and economic uncertainty due to tariffs [1][4] - The U.S. economy contracted by 0.3% in Q1 2025, contrary to expectations of a 0.4% growth, raising recession fears [7] Group 2: Investment Recommendations - Defensive stocks, particularly in the utilities sector, are recommended for investment, including The AES Corporation, DTE Energy Company, Atmos Energy Corporation, and American Water Works Company, all carrying a Zacks Rank 2 (Buy) [2][3] - These stocks are characterized as low-beta (beta < 1) with high dividend yields, making them attractive during market volatility [3] Group 3: Company Profiles - **The AES Corporation**: A global power company with operations in 14 countries, expected earnings growth rate of 1.4%, Zacks Rank 2, beta of 0.94, and a dividend yield of 6.74% [8][9] - **DTE Energy Company**: A diversified energy company with an expected earnings growth rate of 6%, Zacks Rank 2, beta of 0.47, and a dividend yield of 3.17% [10] - **Atmos Energy Corporation**: Engaged in regulated natural gas distribution, with an expected earnings growth rate of 5.3%, Zacks Rank 2, beta of 0.74, and a dividend yield of 2.15% [11][12] - **American Water Works Company**: Provides water services to over 14 million customers, with an expected earnings growth rate of 6.1%, Zacks Rank 2, beta of 0.73, and a dividend yield of 2.08% [13][14]