Utility stocks have mostly been viewed as safe, boring, reliable cash generators that provide portfolio protection in times of uncertainty. The tradeoff for that reliability has been that, due to typically having regulated rate structures, utility companies require approval to raise prices, hindering revenue growth.
However, a change is underway, as a new revenue catalyst is emerging, driven by the increasing energy and resource demands of data centers. That new revenue source for many people utility provider This could not only cause the stock price to rise as more investors look at the increase in sales, but could also allow companies to maintain their dividend payments and even increase them for years to come.
Companies considering investing for this change include American Electric Power (AEP 0.67%), American Water Works (Oho +0.70%)And black hills (BKH 1.05%).
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American Electric Power
American Electric Power lives up to its name, generating electricity for more than 5 million customers in 11 states. It’s that kind of reach that helps generate consistent cash flow, and the company is spending $72 billion on infrastructure over five years to continue supporting its operations.
today’s change
(-0.67%) $-0.90
current price
$133.66
key data points
market cap
$73B
day limit
$132.02 -$134.16
52wk range
$97.46 -$137.74
volume
2.9M
average volume
3.5M
gross margin
32.49%
dividend yield
2.81%
$72 billion is indeed a significant amount. Still, with Fortune Business Insights estimating that the global data center market will grow from approximately $300 billion in 2026 to approximately $699 billion by 2034, American Electric is now positioning itself to be a major player for the future. The company is partnering with the US Department of Energy and SB Energy softbank group Subsidiary company to support a data center in Ohio.
As for income generation, American Electric has paid a dividend every year since 1910, and it has offered a consistent, consistent dividend ever since. dividend increases. Its payout is respectable, currently yielding around 2.8%.
American Water Works
American Water Works was founded in 1886 and provides water and wastewater services in several states. This is an essential business in itself, but the company also has a new revenue catalyst due to data center demand. Apart from power consumption, data centers also require cooling and water treatment solutions.
American Water Works could meet that demand with its proposed merger essential utilities. Essential is an investor in a data center facility in Pennsylvania, and will provide water services to both the power plant and data center involved in the project.
today’s change
(0.70%) $0.91
current price
$131.61
key data points
market cap
$26B
day limit
$128.50 -$131.81
52wk range
$121.28 -$150.51
volume
2.1m
average volume
1.9m
gross margin
43.33%
dividend yield
2.52%
As a bonus, it also provides essential utilities natural gas Services. Through a subsidiary, Essential will provide gas consultancy and other services for the project mentioned above.
American Waterworks’ dividend payout is 2.5%, and when it combines with Essential Utilities, the new entity is expected to follow American Water’s growth targets for dividend payouts.
black hills
Black Hills operates natural gas and power sectors with more than 1.3 million customers in eight states. It took advantage of partnerships early in the data center boom meta platform To power a data center in Wyoming in 2014. On 14th April, Microsoft Also announced utility partnership with Black Hills.
Due to a planned merger, it may soon have even more useful resources. Northwestern Energy GroupWhich provides natural gas and electricity services to more than 850,000 customers.
today’s change
(-1.05%) $-0.81
current price
$76.02
key data points
market cap
$5.8B
day limit
$75.59 -$76.80
52wk range
$55.48 -$78.69
volume
31K
average volume
1.1m
gross margin
26.24%
dividend yield
3.59%
If the merger is approved, the combined entity will be named Bright Horizon Energy, and it is expected to continue paying dividends. That payout currently yields 3.7%, the highest yield of the three companies highlighted above.