Feature Article

US demand for electricity is projected to grow six-fold over the next 20 years. And no power company is better positioned to benefit than Florida-based NextEra Energy (NYSE: NEE). The company is best known as America’s largest producer by far of energy from solar, wind and battery storage. But it’s also the seventh largest nuclear power developer and operator in the world. That includes 4 plants selling into wholesale markets, with the shuttered Duane Arnold facility in Iowa now reopening.

Rising free cash flow as 5G wireless and fiber broadband expansion reaches targets. More favorable regulation, regardless of what party wins upcoming Canadian elections. Rapid artificial intelligence growth in partnership with NVIDIA (NSDQ: NVDA), and a building West Canada energy boom: All are driving growth at Canadian communications company and new Aggressive Holding Telus Corp (TSX: T, NYSE: TU).

Elevated debt has claimed another dividend: Communications infrastructure operator Crown Castle (NYSE: CCI) announced last month it will cut its quarterly dividend from $1.565 to $1.0625 per share, starting with the June payment. The -32 percent “re-set” reflects the earnings loss from the sale of real estate investment trust Crown Castle’s fiber broadband and “small cell” operations in two separate deals for “aggregate proceeds” of $8.5 billion. Management expects to use $3 billion of that to fund a share buyback plan, the rest to pay down credit lines and make a dent on $23 billion plus of long-term debt.

Even on washout trading days like April 4, 2025, some stocks gain ground. Friday’s Utility Report Card winners were basically a handful of non-US stocks. The long-lagging utility sector has gained strength since featured in the February issue.

Call it “Liberation Day” or the “Greatest Economic Own Goal in History.” The Trump Administration’s tariffs on substantially everything Americans buy will have an impact. That realization has now sunk in for the stock market. Down roughly -18 percent from its late February peak, the S&P 500 is now firmly in correction territory. That’s defined as a drop of at least -10 percent from the most recent high.

Being on the same page with state regulators is priority one for utilities’ ability to invest and grow. And Eversource Energy (NYSE: ES) is on very firm ground, after extending guidance through 2029 for 5 to 7 percent annual earnings and dividend growth. The company raised its five-year investment plan by 10 percent to $24.2 billion last month. The key driver is $7 billion for transmission grid hardening and connecting “diversified energy resources to the grid.”

From post-Three Mile Island General Public Utilities in the 1980s to PG&E Corp (NYSE: PCG) this decade, no regulated US utility has ever failed to recover from disaster. And battered Aggressive Holding Algonquin Power & Utilities (TSX: AQN, NYSE: AQN) won’t be the first. Understandably, many are skeptical. Algonquin appeared to hit bottom in early 2023, cutting its dividend by -40 percent and launching a full strategic review of the business. But results announced last summer included another -40 percent cut. And in January, the stock hit its lowest point in over nine years.

Doom or boom: The stock market of early 2025 can’t seem to make up its mind. Last week ended on a good note for most of the Utility Report Card coverage universe. And several Portfolio stocks are already sitting on sizeable year-to-date gains. Those include...

Elevated debt: That’s historically been the greatest threat to utility and essential services company dividends. And it’s the case in 2025 as well, with the Federal Reserve holding interest rates higher for longer and concerns about global economic growth rising. Regulated utilities can safely carry much higher levels of debt than other industries. That’s because the revenue is backed by monopolies providing essential services at regulated rates. Other Utility Report Card coverage universe companies protect revenue from economic ups and downs with long-term contracts.

Investor-owned utilities serve 72 percent of US electric and natural gas customers. That’s according to the US Energy Information Administration. In contrast, investor owned water and wastewater utilities serve just 11 percent of Americans. Everyone else pays their bills to either large municipal systems like the New York Municipal Authority—or else the 48,000 plus community water systems and/or 23,000 plus operators of wastewater treatment facilities scattered across the country.