Top Picks for 2024: Embrace These 2 Utility Stocks and Steer Clear of the Troublesome One

Navigating the Shifting Tides: Utility Stocks Outlook for 2024


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In the ever-evolving landscape of Wall Street, the utility sector, traditionally a safe haven, faced a challenging year in 2023. As of December 1, it stands as the worst-performing sector after remarkably weathering the 2022 bear market.


The Utility Sector’s Rollercoaster Ride

Investors often turn to utility stocks for their dividends and stability, driven by consistent demand for electricity, water, and natural gas. However, the sector faced an unexpected downturn in 2023 due to rapidly rising interest rates, creating a unique challenge for this once-reliable asset class.


The Impact of Interest Rates on Utilities

With Treasury yields hitting around 5%, investors found safer returns in longer-term bonds and short-term Treasury bills, posing a direct threat to utility stocks. However, the prospect of Federal Reserve rate cuts in 2024 has started to shift the narrative, with falling Treasury yields potentially revitalizing interest in the utility sector.


Utility Stock No. 1: NextEra Energy

NextEra Energy (NYSE: NEE) emerges as a standout utility stock for investors in 2024. Despite facing headwinds from higher bond yields and concerns related to NextEra Energy Partners, the sector’s largest utility with a market cap of $122 billion, is poised for a strong rebound.

The Green Energy Differentiator

NextEra Energy’s focus on renewable energy sets it apart, with 34 GW dedicated to renewable sources out of its total 70 GW capacity. This commitment to green energy has translated into lower electricity generation costs, driving a compound adjusted earnings-per-share growth rate of 9.8% since 2012.

Investment Opportunity

Despite a challenging year, NextEra Energy’s forward price-to-earnings (P/E) ratio has fallen to 17.5, presenting a compelling buying opportunity. With a forward-looking perspective and a commitment to renewable energy expansion, NextEra Energy stands out as a potential gem in the utility sector.


Utility Stock No. 2: York Water

In contrast to the turbulence faced by NextEra Energy, York Water (NASDAQ: YORW) emerges as a promising water utility stock for investors in the upcoming year. With a unique distinction as “Wall Street’s Greatest Dividend Stock,” York Water’s steady performance and reliable dividend payout make it an appealing choice.

The Longevity of Dividend Payouts

With an uninterrupted dividend history spanning 207 years, York Water has demonstrated unparalleled stability in dividend payouts. The company’s status as a regulated water and wastewater utility ensures predictable operating cash flow, making it a dependable income generator for investors.

Strategic Rate Hikes

York Water’s recent approval for rate hikes by the Pennsylvania Public Utility Commission reflects its proactive approach to infrastructure upgrades. This move is expected to contribute significantly to the company’s revenue in 2023, showcasing its ability to navigate regulatory challenges.

Three wind turbines next to an electrical tower, with the sun rising on the horizon.
Image source: Getty Images.


Utility Stock to Avoid: Hawaiian Electric Industries

However, not all utility stocks are created equal, and Hawaiian Electric Industries (NYSE: HE) raises red flags for investors considering its outlook for 2024.

Financial Uncertainty and Legal Challenges

Hawaiian Electric Industries faces financial uncertainty stemming from the Lahaina wildfire tragedy and dozens of lawsuits. The company’s contribution to the One Ohana Initiative, while a positive gesture, doesn’t resolve the looming legal challenges, with estimates suggesting potential claims of up to $4.9 billion.

Delayed Financial Statements

Compounding its challenges, Hawaiian Electric Industries will delay filing financial statements, amplifying concerns about its solvency. The suspension of its quarterly dividend further underscores the financial strain the company is currently facing.

In the complex landscape of utility stocks, prudence suggests steering clear of Hawaiian Electric Industries in 2024. The sector offers ample alternatives with proven track records and stability.



As the utility sector navigates the uncertainties of rising interest rates and economic shifts, careful consideration of individual stocks becomes paramount. NextEra Energy and York Water emerge as promising buys, each with unique strengths, while Hawaiian Electric Industries poses significant risks that investors may find unpalatable in the new year.


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