Sempra Energy describes itself as an energy infrastructure company. It is based out of California and was formed in 1998 when two holding companies, Pacific Enterprises and Enova, combined. Later on, Sempra Energy made other acquisitions and has grown its presence in other markets outside of California. The utility industry is a slow-growing and mature one. It is also undergoing a major transformation due to the importance of sustainability and the concept of net-zero. Utility companies that are increasing their share of renewable energy are the ones positioning themselves for the future. Sempra Energy has been making efforts on the sustainability front. It is among the top utilities stocks to buy now since it is a leading player in the Southern California market. It focuses mainly on the transmission and distribution of energy and makes significant infrastructure investments in those areas.
Sempra Energy Business Drivers
As Sempra Energy’s major revenue contributors are its utility segments, it is dependent on the level of economic activity within the region where it serves. It also depends on the economic expansion and population growth trends of that region. The price of alternative products available in the market, the changing government regulations, climate regulations, etc., all play a part in shaping the business dynamics of utility companies like Sempra Energy. There are new competitors engaged in the business of installing rooftop solar panels and providing battery storage solutions. Sempra Energy’s SDG&E utility business segment has roughly 900,000 customer meters. Its SoCalGas segment has over 6 million customer meters. That makes Sempra one of the largest utility companies in California. It is among the best utilities stocks now if you are looking to add some exposure to the sector.
One great thing about buying utility company stocks is the generous dividends on offer. Utility businesses operate in mature industries and have stable cash flows. Therefore, they tend to pay dividends with yields of over 3%. In fact, Sempra Energy’s stock was trading at a 3.35% dividend yield as of 9th August 2021.