Breaking Down Block (SQ) Stock Before Q3 Earnings

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Companies in the Utilities sector are often common targets of investors when thinking of dividend-paying stocks.

In addition, stocks from the sector are often highly-defensive in nature, thanks to their advantageous ability to generate revenue in the face of many economic backdrops.

Combining this lower-risk approach with a steady income stream makes it much easier to understand why so many enjoy parking their cash in the sector.

Three top-ranked stocks from the Zacks Utilities sector – NextEra Energy NEE, NRG Energy NRG, and Global Water Resources GWRS – could all be considerations for investors looking to add an additional layer of defense into their portfolios and reap a steady income stream.

Below is a chart illustrating the performance of all three stocks over the last year, with the S&P 500 blended in as a benchmark.

Image Source: Zacks Investment Research

Let’s take a closer look at each one.

NextEra Energy

NextEra Energy is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy. The company sports a Zacks Rank #2 (Buy).

A significant positive, NEE is a part of the elite Dividend Aristocrat club. Dividend Aristocrats have consistently paid and increased their dividends for a minimum of 25 consecutive years, putting their well-established and successful business natures on full display.

NEE’s annual dividend currently yields 2%, below its Zacks sector average by a fair margin. Still, the company’s 10% five-year annualized dividend growth rate bridges the gap.

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Image Source: Zacks Investment Research

NextEra is no stranger to consistent growth; the Zacks Consensus EPS Estimate of $2.89 for its current fiscal year (FY22) suggests an improvement of 13% Y/Y. And in FY23, estimates allude to a further 8% of growth.

Zacks Investment Research
Image Source: Zacks Investment Research

NRG Energy

NRG Energy generates electricity and provides energy solutions and natural gas to millions of customers through its diverse portfolio of retail brands. Currently, NRG sports the highly-coveted Zacks Rank #1 (Strong Buy).

NRG’s annual dividend yield stands tall at 4.3%, nicely above its Zacks sector average. Impressively, the company’s payout has grown by more than 100% over the last five years.

Zacks Investment Research
Image Source: Zacks Investment Research

Global Water Resources

Global Water Resources is a water resource management company that owns and operates regulated water, wastewater, and recycled water utilities.

Like the stocks above, the company has seen its earnings outlook drift higher over the last several months, landing the stock into a Zacks Rank #2 (Buy).

Zacks Investment Research
Image Source: Zacks Investment Research

The company has been on an impressive earnings streak, exceeding earnings and revenue estimates in four consecutive quarters. Just in its latest release, GWRS surpassed the Zacks Consensus EPS Estimate by a sizable 40% and reported revenue 1.6% above expectations.

Additionally, it’s worth highlighting that all four of its last EPS beats have been by double-digit percentages.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

Stocks in the Zacks Utilities sector are defensive by nature, as these companies’ services witness consistent demand no matter the economic backdrop.

In addition, they commonly reward their investors handsomely, providing a nice cushion to the impact of drawdowns in other positions.

For those seeking stocks that provide an income stream paired with favorable earnings outlooks, all three stocks above – NextEra Energy NEE, NRG Energy NRG, and Global Water Resources GWRS – deserve consideration.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

NextEra Energy, Inc. (NEE) : Free Stock Analysis Report

NRG Energy, Inc. (NRG) : Free Stock Analysis Report

Global Water Resources, Inc. (GWRS) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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