Utility companies can be great long-term investments. Generally, their business models are predictable and not very volatile. Energy consumption continues even during financial crises and events like a pandemic. Therefore, demand is relatively recession-proof. One additional benefit of utility stocks is the dividends that they pay. Most utility companies generate enough cash flow to cover their capital expenditures and pay out a reasonable dividend. A decent utility stock will pay a 2.5% to 3% dividend yield, while some may go as high as 3.5%. However, one drawback of utility companies is that they are low on growth. The population isn’t exactly growing at 10%, and there is a limit to how much energy one will consume. Having listed the pros and cons, if you are looking for the best utility stocks to invest in, then you may want to consider the regional leaders.
Business Segments Of CMS Energy Corporation
CMS Energy Corporation has three main business segments. The first is the consumer electric utility business that provides electricity to residential, commercial, and industrial customers in Michigan. The segment generated $4.4 billion in revenue in the year 2020. The second segment is the consumer gas utility business which provides natural gas to residential, industrial, and commercial customers in the Michigan area. This segment generated $1.8 billion in revenue in the year 2020. Next is the enterprise segment that is involved in power production. The segment generated $229 million in revenue in 2020. The fourth and final business segment is EnerBank, an FDIC-insured industrial bank that provides unsecured installment loans for home improvement. EnerBank generated revenues of $262 million in 2020. CMS Energy Corporation has a diversified business and is among the top utility stocks for long-term investing.
Best Utility Stocks To Invest
CMS Energy had a P/E ratio of 20 as of 2nd July 2021. The stock was trading at a 2.9% dividend yield on that day. Its 52-week high was $67.98, while the price ranged between $59.6 and $60 on 2nd July.