3 Utility Dividend Stocks Set to Soar as Summer Approaches

Utility stocks are the ultimate safe haven if you’re looking to dodge the impact of tariffs. Any new tariff announcement will cause the stock market to react badly. But each tariff shock could disproportionately benefit utility stocks since investors will be rushing in to add ballast to their portfolios.

Businesses in this sector are almost entirely shielded from the impact of tariffs, and this is especially true if you look into regulated utilities. These companies have some of the most stable cash flows in the stock market, and this is cash flow that rarely declines, if ever. Only the severest of recessions are going to cause a dent here due to missed payments, but even that is covered by the government in some states. The operations here are entirely domestic, so it’s a good idea to snap up some utility stocks before summer kicks in and the tariff pause expires.

The AES Corporation (AES)

The AES Corporation (NYSE:AES) is a utility and power generation company based in the US. The company has an aggressive growth strategy and is focusing on clean energy to triple its renewables capacity. It is looking to add 25GW to 30GW by 2027.

AES is a recovery play. Shares are down by over 62% from its peak in late 2022, and this is also due to the company’s debt load. It had over $29 billion in debt by the end of 2024, and rising interest rates caused net interest loss to hit $1.1 billion. Even then, net income came out at $1.7 billion, and dividends were held steady.

The current entry point keeps looking more attractive. The Federal Reserve is unlikely to cut this month, and there’s still plenty of doubt about whether or not it can make do on its promise of two cuts this year. But even if that doesn’t happen, AES has shown it can pay dividends just fine, no matter the interest rate environment. It trades at less than 6 times earnings, and the stock is even cheaper than 2020 trough prices.

Q1 earnings are to blame for the bad performance this year, since revenue missed by almost 4% and EPS missed by 17.8%. That said, this has been priced in, and the expectations going forward are quite low.

The dividend yield here is 6.5%.

Dominion Energy (D)

Dominion Energy (NYSE:D) is an energy company that provides regulated electricity and natural gas. The stock hasn’t been the best-performing name in its sector so far, and it is still down from its 2022 peak. Even before then, it was a name that delivered only around 19% in gains from 2014 to 2022.

I do think that this will likely change in the coming years, and D stock could start delivering gains like it did in the years following the Great Recession. Not only does the stock have lots of room for recovery, but it also has a tailwind: electricity companies will likely see solid demand from the AI boom. This is something that has already lifted companies like Constellation Energy (NASDAQ:CEG).

The stock trades just above 20 times earnings, which is lower than the 23 times earnings it has traded at historically.

The biggest draw for me is that analysts see the annual EPS (minus non-recurring items/NRI) climbing from $2.77 to $3.4. Trailing EPS (minus NRI) is expected to climb more slowly, but it is also expected to be at nearly $4 in the first quarter of 2027. If Wall Street holds up that 20 times earnings premium and the company meets estimates, the stock will be on a similar trajectory to the one seen from 2009 to early 2015. I believe it’s likely for Dominion Energy to meet these estimates, since the company rarely misses on the bottom line. Utility companies are very predictable.

The 4.85% dividend yield is icing on the cake.

Eversource Energy (ES)

Eversource Energy (NYSE:ES) delivers electric and natural gas to homes and businesses in the Northeastern United States. It’s in the same boat as D stock, since the stock fell in 2022 and hasn’t recovered since. But unlike Dominion Energy, the stock has been trading sideways and is yet to make a recovery.

Eversource has been historically one of the most stable stocks in the market. It was one of the fastest to recover from the COVID shock due to how sturdy the business is. The only reason it got knocked down in 2022 was due to the debt. The company has $29.435 billion of debt on its balance sheet. And when interest rates went up, so did the servicing costs on this enormous debt. Net interest losses stood at $973.1 million in FY 2024. The debt servicing has been priced in after the 2022 selloff.

Interest rates have thankfully plateaued. It is likely that interest rates will continue to fall further in the coming months. And when that happens, the servicing costs on Eversource’s debt will also go down. Net income in FY 2024 was $811.7 million. I believe the only way is up from here, minus any Black Swan events.

The dividend yield here is 4.8%.

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