BEP Or PNW: Which Utility Stock Is Better Placed Right Now?
Zacks Investment Research | Jun 12, 2019 09:23PM ET
The demand for electricity, natural gas and water is not much affected by fluctuations of the economy. This in a way provides an assurance of steady performance from utility operators. These are preferred by investors due to stability of operations and their capability to reward shareholders with regular dividend payments.
Utility operation is capital intensive, as consistent investment is required to upgrade and maintain infrastructure, which includes transmission and distribution lines, as well as production plants. Usage of modern technology like drones for maintenance and installation of smart meters, as well as strengthening of grids require considerable funding. Apart from internal sources of funds, utilities depend on the credit market for funds to carry on upgrades.
Interest rates have increased a number of times over the last couple of years, which raised this sector’s cost of capital, in turn impacting margins. However, the U.S Fed currently decided to keep the rates unchanged in the near future, which is indeed good news for capital-intensive utility companies.
Cost control, new electric rates, customer growth and stable demand continue to help the utility sector in maintaining operational stability.
Amid the above backdrop, let’s focus on two Zacks Zacks Investment Research
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