In this article, we discuss the 10 biggest electrical companies in the USA. To skip the industry analysis, you can go directly to the 5 Biggest Electrical Companies in the USA.
Utility stocks such as electric utilities are among the favorites of conservative investors, especially during a recession. These stocks have a low beta, which means market volatility doesn’t affect them much.
Utility companies are heavily regulated, due to which the number of competitors of these companies is fewer compared to other sectors of the market. This allows investors to easily predict the revenues and profits of these companies.
Up until mid-September, utility companies, including electrical companies, were among the best-performing stocks of 2022. Utilities Select Sector SPDR Fund (NYSE:XLU) had a 5% return while S&P 500 had declined by 18% YTD. However, in October, the Federal Reserve’s interest rate hikes showed their effects on the sector and the fund kept falling for several sessions and was the worst-performing sector among 11 S&P industry groups. Janney analyst Michael Gaugler believes the current year could be disappointing for the utility sector and industry "is likely to rally once the U.S. Federal Reserve signals its rate hike policy is coming to a close."
In the future, the utility sector should rally due to the aggressive adoption of electric vehicles and the Biden administration’s clean energy and infrastructure legislation.
Future Outlook
The power generation market size was around $1.39 trillion in 2020 and is expected to reach $1.83 trillion by 2028 at a CAGR of 3.53%. According to the World Energy Outlook 2019, the global electric utility demand is expected to increase at the rate of 2.1% per annum till 2040, and the electricity demand is set to double by 2050.
The utility market has always benefited during recessionary times as seen in the 2001 and 2007-09 recessions. In the fourth quarter of 2022, the utility sector is outperforming the market by 30%.
This article is about the biggest electrical utility companies in the United States. Exelon Corporation (NASDAQ:EXC), PG&E Corporation (NYSE:PCG), and NextEra Energy, Inc. (NYSE:NEE) are some of the biggest electrical and electric utility companies that investors should keep an eye on.
10 Biggest Electrical Companies in the USA
Photo by Matthew Henry on Unsplash
Our Methodology
After a careful assessment of the electrical industry in the United States, we selected these 10 companies based on the number of customers, size of their operations, financial performance, analyst ratings, and growth catalysts. We preferred companies with positive analyst ratings and those which pay dividends to shareholders.
CenterPoint Energy, Inc. (NYSE:CNP) is a Texas-based utility company focusing on electric power and natural gas. As of November 21, the company has a dividend yield of 2.41% and has been raising dividends for the past 2 years. The latest quarterly dividend of $0.18 is payable by December 8 to the shareholders of record on November 17.
CenterPoint Energy, Inc. (NYSE:CNP) recently announced that it is planning to invest $43 billion between 2021 and 2030 to upgrade and modernize its utility-grade infrastructure. This will allow the company to increase its rate base. The rate base is the total value of a utility’s assets. It is beneficial to the company investors as regulators allow utility companies to earn a specified rate of return based on rate base, which in turn allows the company to raise its prices.
CenterPoint Energy, Inc. (NYSE:CNP) has been covered by 8 analysts in the last three months and has been given an average price target of $31.13, showing an upside of 4.11% from the current stock price of $29.90.
Exelon Corporation (NASDAQ:EXC), PG&E Corporation (NYSE:PCG), and NextEra Energy, Inc. (NYSE:NEE) are some of the best electric companies in the US, along with CenterPoint Energy, Inc. (NYSE:CNP)
9. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Hedge Fund Holders: 25
American Electric Power Company, Inc. (NASDAQ:AEP) is an Ohio-based electric-utility company with over 5 million customers in 11 states across the US. It is one of the biggest electric companies in the US and has close to 17,000 employees and 224,000 miles of distribution lines. The company has around 31,000 megawatts of generation capacity which includes 7,100 megawatts of renewable energy.
On October 24, Guggenheim analyst Shahriar Pourreza maintained a Buy rating on American Electric Power Company, Inc. (NASDAQ:AEP)’s shares and lowered the price target to $93 from $109. The price revision came in light of rising interest rates by the Federal Reserve and forward yield expectations.
American Electric Power Company, Inc. (NASDAQ:AEP) has increased its dividend for the past 12 years and has a 62.71% payout ratio. The latest declaration of quarterly dividend raise was made in late October with a 6.4% increase to $0.83 per share from the previous $0.78. The dividend is payable by December 9 to the shareholders of record on November 10. As of November 21, American Electric Power Company, Inc. (NASDAQ:AEP) has a dividend yield of 3.59%
Here is what ClearBridge Investments had to say about American Electric Power Company, Inc. (NASDAQ:AEP) in its Q1 2022 investor letter:
“About 5% of the portfolio is in transitioning power companies, typically migrating from coal to renewables. We have been active in encouraging these transitions and added a new position in American Electric Power (NASDAQ:AEP). AEP has the fastest planned renewable energy ramp in the U.S., with plans to both shrink coal and grow renewables by 50% each by 2030. This would drive an 80% emissions reduction, while supporting high single-digit earnings growth at a double-digit return.”
Ameren Corporation (NYSE:AEE) is a Missouri-based company that operates as a holding company for several power and energy companies. It serves over 2.4 million electric supply customers in Illinois.
In the third quarter of 2022, Ameren Corporation (NYSE:AEE) reported diluted EPS of $1.74, compared to $1.64 in the same quarter last year. The revenue saw a 27.33% YoY growth to $2.31 billion against the $1.89 billion consensus. As of September 30, the company had cash and cash equivalents of $7 million and its long-term debt totaled $13.577 billion. Furthermore, the company’s cash flow from operating activities totaled $1.599 billion in the first 9 months of 2022, compared to $1.19 billion in the same period last year.
For FY 2022, Ameren Corporation (NYSE:AEE) narrowed its EPS guidance to $4 - $4.15 from the previous $3.95 - $4.15 per diluted share.
Ameren Corporation (NYSE:AEE) has been raising its dividend for the past 9 years and has a 2.71% dividend yield as of November 21. The next quarterly dividend is payable by December 30 to the shareholders of record on December 7.
DTE Energy Company (NYSE:DTE) is a diversified utility company headquartered in Detroit. The company is one of the biggest electric companies. It provides electricity to over 2.2 million people. According to our database, 30 hedge funds had a stake in the company in Q3 2022, compared to 29 in the previous quarter. In Q3, Millennium Management was the largest stakeholder of DTE Energy Company (NYSE:DTE) with 732,829 company shares worth $84.3 million.
On November 14, DTE Energy Company (NYSE:DTE)’s management declared a 7.6% increase in its quarterly dividend to $0.9525, payable by January 15 to the shareholders of record on December 19. As of November 21, the company has a dividend yield of 3.32%.
On November 21, Mizuho analyst Anthony Crowdell reaffirmed a Buy rating on DTE Energy Company (NYSE:DTE) shares and raised his price target to $122 from $115 due to current market multiples. In the last three months, 7 analysts have covered the DTE Energy Company (NYSE:DTE) with an average price target of $125.14 and a Moderate Buy rating.
Entergy Corporation (NYSE:ETR) is an American electric power production company. The company operates in Arkansas, Louisiana, Mississippi, and Texas. On October 24, Guggenheim analyst Shahriar Pourreza reiterated a Buy rating on the company shares and lowered the price target to $117 from $129.
For Q3 2022, Entergy Corporation (NYSE:ETR) reported an EPS of $2.84, outperforming the estimates by 19 cents. The company revenue recorded a 25.8% YoY growth to $4.22 billion, beating the estimates by $802.15 million. Furthermore, Entergy Corporation (NYSE:ETR) declared a 6% increase in its quarterly dividend. The new dividend of $1.07 is payable by December 1 to the shareholders of record on November 14.
In Q3 2022, Millennium Management was the largest stakeholder in Entergy Corporation (NYSE:ETR) with $88.39 million worth of shares. The firm increased its holdings in the company by 257% in the third quarter. Furthermore, Balyasny Asset Management increased its stake in Entergy Corporation (NYSE:ETR) by a massive 6019% to 505,869 shares worth $50.9 million.
Entergy Corporation (NYSE:ETR) is one of the biggest electric companies in the US, along with Exelon Corporation (NASDAQ:EXC), PG&E Corporation (NYSE:PCG), and NextEra Energy, Inc. (NYSE:NEE).