The utility sector, a slumbering behemoth for decades, has stirred. A most peculiar awakening, wouldn’t you agree? The Vanguard Utilities Index Fund ETF, a creature of habit, has dared to ascend by over 11% in the last twelve months. A strong return, yes, but consider the source – a sector previously known for the predictability of a damp Tuesday. The whispers now speak of artificial intelligence, a new god demanding ever-increasing sacrifices of electricity. And where there is demand, my friends, there is opportunity…and a certain amount of absurdity.
This AI-fueled surge is in its infancy, a mischievous imp just learning to manipulate the grid. Yet, it promises growth, a seductive siren song for those of us who traffic in probabilities. Two names, therefore, warrant consideration this February: NextEra Energy and Dominion Energy. Not titans, perhaps, but certainly not insignificant players in this unfolding drama.
Powerful Growth for the Next Decade
NextEra Energy, a rather prosaic name for a company attempting to harness the very forces of nature, operates Florida Power & Light, a utility serving a state populated by retirees, tourists, and an alarming number of alligators. But beyond the sunshine and reptile concerns, they also run NextEra Energy Resources, a venture into the realm of renewable energy. They’re building windmills and solar farms, attempting to placate the environmental deities while simultaneously ensuring a steady stream of revenue. A delicate balancing act, wouldn’t you say? The company managed an 8% increase in adjusted earnings per share last year, fueled by Florida’s expansion and a thirst for clean energy. They’ve installed 8.7 gigawatts of new generation and storage – enough to power a small country, or at least a very enthusiastic city. And they’ve secured a backlog of 13.5 GW of new projects, increasing their total backlog to a rather impressive 30 GW. A formidable undertaking, even for a company accustomed to dealing with hurricanes and eccentric clientele.
This backlog, a comforting weight in a volatile world, underpins their long-term growth outlook. They anticipate an 8% annual increase in earnings per share through 2035. A bold prediction, perhaps, but one supported by their plan to increase dividends by 10% this year and 6% annually through 2028. A current yield of 2.5% suggests a potential annualized total return exceeding 10%. A tempting proposition, wouldn’t you agree? Though, one must always remember the inherent unpredictability of markets. A sudden geomagnetic storm, a rogue solar flare…or simply a change in investor sentiment can send even the most promising stock plummeting. The market, after all, is a capricious mistress.
Powering Data Center Alley
Dominion Energy, a more understated player, operates utilities in Virginia and the Carolinas. These entities, bless their bureaucratic hearts, are investing heavily to support the region’s growing power demand. Virginia, in particular, has become the world’s largest data center hub – a digital Vatican, if you will, where the sacred data of our modern age is stored and processed. Dominion is the industry leader in connecting these digital cathedrals to power, supporting a staggering 450 facilities. Power demand surged 30% last year, and the trend shows no sign of abating. They are in talks to supply up to 47 GW of power to data centers – a 17% increase over the previous year. A truly impressive feat of engineering…and a testament to our insatiable appetite for information.
This demand is driving Dominion’s plan to invest $50 billion between 2025 and 2029. The bulk of this spending will be in Virginia, naturally. One of their most ambitious projects is the $11.5 billion Coastal Virginia Offshore Wind project, funded in part by a partner named Stonepeak. It will deliver nearly 3 GW of power. It’s on track to start producing in the first quarter of this year, with full completion expected in early 2027. A monumental undertaking, and one that will undoubtedly attract the attention of environmental activists, NIMBYs, and assorted other concerned citizens. Such is the price of progress.
These investments should fuel 5% to 7% annual earnings per share growth. Add in a dividend yield exceeding 4% (which they intend to maintain despite this heavy investment phase), and Dominion could generate double-digit total annual returns. A compelling argument, wouldn’t you say? Though, one must always remember that even the most carefully laid plans can be derailed by unforeseen circumstances. A hurricane, a cyberattack, or simply a change in consumer behavior can throw everything into disarray. The world, after all, is a chaotic and unpredictable place.
High-Powered Total Return Potential
NextEra Energy and Dominion Energy, therefore, stand to be among the biggest beneficiaries of the coming AI power surge. It should enable these utilities to deliver healthy earnings growth, which, when combined with their dividends, should fuel strong total shareholder returns. That high-powered total return potential makes them the top utility stocks to buy this month. Though, I caution you, my friends, do not mistake this for a guarantee of success. The market is a fickle beast, and fortunes can be made and lost in the blink of an eye. Proceed with caution, and remember the words of the wise: a bird in the hand is worth two in the bush…especially when those bushes are powered by artificial intelligence.
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2026-02-05 11:53