One of the slower but surer ways to grow your portfolio is by investing in dividend stocks. This is because dividend stocks ensure that you get nice little payouts each year, which you can reinvest to further boost your portfolio and generate long-term gains. These stocks offer a reliable source of income and add stability to your portfolio.
But where do these dividends come from? Dividends are a portion of a company’s profit. These earnings represent regular cash payments that are made to the company’s shareholders.
Since dividends are derived from a company’s profits, they are generally a sign of financial health. However, not every company pays dividends. Some choose to reinvest all their profits back into the business, while others return a portion directly to investors. In order to receive a dividend, you must be a “shareholder of record” by a specific date set by the company.
Dividends are typically paid on a per-share basis, with the dividend yield calculated by dividing the amount paid per share by the stock’s price. This means that, all else being equal, the yield decreases as the stock price increases.
The average dividend yield paid by companies on the S&P 500 is between 1% and 3%, depending on market conditions.
With that, let’s now look at some strong dividend stocks and not just any, but those in the utility sector, which includes companies providing essential services like electricity, gas, and water.
This electric power and energy infrastructure company is a leader in renewable energy, primarily operating through its wholly owned subsidiaries, which include NextEra Energy Resources (which, together with NextEra Energy Transmission, forms NEER) and Florida Power & Light Company (FPL).
FPL is an electric generation, transmission, and distribution company with a net generating capacity of over 35,000 MW and serves about 12 million people.
NEER is a massive clean energy platform offering renewable fuels and battery storage. It operates electric generation facilities in North American wholesale energy markets, covering the US and Canada.
As the world’s largest producer of wind and solar energy, NextEra Energy is deeply aligned with the global energy transition and is aggressively pursuing zero-carbon goals with major investments in energy storage (hydrogen and battery) and smart grid technologies. These initiatives mean NextEra Energy benefits from both regulatory tailwinds and public support, giving it a future-forward edge.
NextEra Energy, Inc. (NEE -1.46%)
As for its financials, this $33.9 billion market cap company’s shares are currently trading at $65.94, down 9.25% YTD. With that, its EPS (TTM) is 3.37, the P/E (TTM) is 19.29, and ROE (TTM) is 14.24%. The company also offers an attractive dividend yield of 3.48%.
In 2024, the company recorded $6.946 billion, or $3.37 per share, in net income on a GAAP basis. On an adjusted basis, NextEra Energy’s earnings were $7.063 billion, or $3.43 per share, representing a YoY increase of 8.2%.
Segment-wise, FPL reported net income on a GAAP basis of $4.543 billion, or $2.21 per share, along with capital investments of $8.2 billion, and successful commissioning of 2.2 GW of new, cost-effective solar.
NextEra Energy Resources posted net income of $2.299 billion, or $1.12 per share. During this period, the company added over 12 GW of new renewables and battery storage projects to its backlog. Additionally, it is recommissioning the Duane Arnold Energy Center, which is expected to start operations by the end of 2028.
While announcing the results, CEO John Ketchum highlighted the company’s continued focus on delivering long-term value for shareholders, noting that it has achieved over 10% compound annual growth in adjusted earnings per share since 2021—the highest among the top 10 power companies.
Last year, NextEra Energy also placed about 8.7 gigawatts of new renewables and storage projects to further expand its leadership in power generation.
“With experience in every part of the energy value chain and a track record of delivering for our customers and shareholders, we believe NextEra Energy is well positioned to capitalize on the opportunity set that lies ahead and the increased power demand that is happening now in the U.S.”
– NextEra Energy CEO Ketchum
Click here to learn how NextEra Energy is powering the Trump-driven reindustrialization.
One of America’s largest energy holding companies, Duke Energy, serves 8.4 million customers across Florida, North Carolina, South Carolina, Indiana, Ohio, and Kentucky. Its collective energy capacity is 54,800 megawatts.
Operating in the Southeast and Midwest, Duke’s scale provides it with stability in operations and influence over regional energy planning.
Duke Energy’s focus is on contributing to a smarter energy future by executing its ambitious energy transition plans while ensuring customer reliability and value. To this end, it is investing in cleaner energy generation and major grid upgrades.
This ongoing shift from coal to natural gas and renewables is driven by its commitment to cut carbon emissions by 50% by 2030 and achieve net-zero by 2050. These efforts are in line with broader regulatory and environmental trends.
During its recent earnings presentation, the company noted continued regulatory execution with $45 billion of historic and future rate base investments approved, advancing new solar and natural gas generation, and sustained operational excellence with its nuclear capacity factor surpassing 90% for the 26th consecutive year.
Duke Energy’s nuclear advantage involves 11 units, which represent the company’s largest and most reliable source of carbon-free generation.
Duke Energy Corporation (DUK -0.78%)
Now, with a market cap of $90.7 billion, Duke shares are trading at $17.81, up 8.46% so far this year. Its EPS (TTM) meanwhile is 5.70, the P/E (TTM) ratio is 20.50, and the ROE (TTM) is 9.12%.
As for the dividend yield, that’s 3.6%. The company actually has a long history of making successful dividend payments, which ensures income stability for you.
In addition to enticing yield, the company is currently pursuing long-term dividend growth. It also projects 5-7% EPS growth through 2029. Together, they bring the risk-adjusted total shareholder return to about 10%.
When it comes to company financials, Duke’s EPS on a GAAP basis was $5.71, and adjusted EPS was $5.90, up from $3.54 and $5.56, respectively, in the previous year.
The higher adjusted earnings were due to an increase in rates, higher sales volumes, and better weather, which were partially offset by higher interest expense, depreciation on a growing asset base, storm costs, and a higher effective tax rate.
According to the incoming CEO, Sideris:
“At Duke Energy, we are committed to investing in the critical infrastructure needed to support our country’s aspirations for technology leadership and economic growth. We will deliver on these goals while maintaining energy reliability, affordability and security for our customers and growing EPS 5% to 7% through 2029.”
For this year, the company is expecting its adjusted EPS to be in the range of $6.17 and $6.42.
With these strong results, Duke closed out “a year of great accomplishment,” and entered the new year “in a position of strength,” said CEO Lynn Good, who also announced Harry Sideris as the next CEO.
American Electric Power is an electric public utility holding company that serves more than five million customers in Texas, Arkansas, Tennessee, Virginia, Kentucky, Indiana, Louisiana, Michigan, Ohio, Oklahoma, and West Virginia.
This wide geographical presence and customer base make American Electric Power a potentially enticing addition to your portfolio, as the diversity reduces its regulatory risk and exposure to localized disruptions.
The company boasts about 29,000 megawatts of electricity generation capacity from diverse sources, including renewables. This distributed clean energy push makes AEP well-positioned to benefit from the ongoing electrification trends that include EV adoption and industrial electrification.
As for transmission lines, that’s one of the largest in the nation at 40K, while distribution miles is 223 K.
According to the company’s earnings presentation, generational load growth reflects customer commitments for about 20 GW of load through 2029, driven by data center demand and economic development.
There’s also a 5-year capital plan of $54 billion, with the potential for up to $10 billion in incremental investments. A major portion of this will be used to improve service reliability, including the use of advanced metering and smart grid technologies to strengthen the system’s ability to withstand weather events and reduce operations and maintenance costs.
The dividend yield stands at nearly 4%, while projected long-term EPS growth is 6%–8%, representing total shareholder returns of 10%–12%, making AEP an attractive option for those seeking steady income.
American Electric Power Company, Inc. (AEP -0.29%)
AEP’s financial health is also solid. With a market cap of $42.3 billion, its shares are currently trading at $101.57, up 10.13% year-to-date. Its EPS (TTM) is 5.59, the P/E (TTM) ratio is 18.19, and ROE (TTM) is 11.35%.
Now, for 2024, it announced GAAP earnings of $2.97 billion or $5.60 per share, a strong growth from $2.21 billion earnings or $4.26 per share recorded in the previous year. Operating earnings (a non-GAAP measure that excludes certain items), meanwhile, were $2.98 billion or $5.62 per share.
These numbers reflect the “significant load growth” the company experienced last year, which was largely attributed to economic development in Indiana, Ohio, and Texas. According to CEO Bill Fehrman, they are anticipating as much as 9% annual growth in total retail load between 2025 and 2027.
Based on their needs, the company has already filed for regulatory approval of 2.3 GW of natural gas generation in SWEPCO and PSO.
This is in addition to having active proposal requests for new generation in PSO, Indiana Michigan Power, and Appalachian Power. AEP has also signed a deal with Bloom Energy to obtain as much as 1 GW of fuel cells to help data center customers expand their operations.
This public utility company’s primary focus is to provide regulated electric and natural gas service to its customers in the Midwest through Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL).
Alliant mainly serves Iowa and Wisconsin, two states that are pushing for local clean energy by ramping up the adoption of wind and solar energy. Its presence in these regions makes Alliant a key player in regional clean energy transitions, where it serves about 430,000 natural gas and 1 million electric customers.
Alliant Energy Corporation (LNT -1.71%)
As of this writing, LNT shares are trading at $59.81, up 1.13% YTD, putting its market cap at $15.36 billion. Its EPS (TTM) is 2.69, the P/E (TTM) ratio is 22.26, and ROE (TTM) is 10.01%.
Alliant Energy offers a lucrative dividend yield of 3.39%. This yield, paired with a compound annual growth rate of 5% to 7%, can be a valuable addition to any portfolio for investors.
In fact, with the recent announcement of a quarterly cash dividend of $0.5075 per share, the company continues its impressive track record of 318 consecutive quarterly dividend payments since 1946. Alliant is also a member of the S&P 500 Dividend Aristocrats Index, which includes companies that have increased their dividends for at least 25 consecutive years.
Financially, the company reported a GAAP EPS of $2.69 and a non-GAAP EPS of $3.04 in 2024, compared to $2.78 and $2.82, respectively, in 2023. For the current year, Alliant expects earnings in the range of $3.15 to $3.25 per share and describes itself as “strongly positioned for future growth.”
In what it called a “solid year,” Alliant Energy completed 1,500 megawatts of solar generation investments in 2024. Combined with its existing 1,800 megawatts of wind resources, these additions advance the company’s clean energy goals.
“These zero-fuel cost, zero-emission investments strengthen the clean energy element of our balanced generation portfolio and reinforce our leadership in the energy transition,” said CEO Lisa Barton.
Earlier this year, the company also announced a $750 million data center campus at the Big Cedar Industrial Center, in collaboration with QTS and the City of Cedar Rapids—marking the largest economic development investment in the city’s history. Barton added:
“We continue to focus on economic development, bringing benefits to communities in both Iowa and Wisconsin.”
Altogether, Alliant’s strong dividend history, consistent EPS growth, clean energy investment strategy, local partnerships, constructive regulatory environment, and robust economic development initiatives make it an attractive option for long-term investors.
Click here for a list of top wind power stocks.
Dominion Energy serves about 7 million customers across multiple states, offering electricity and natural gas services. It operates through Dominion Energy Virginia, Gas Distribution, and Dominion Energy South Carolina in addition to Contracted Energy, which includes a non-regulated electric generation fleet and renewable natural gas operations.
Recently, the company received federal approval to proceed with its offshore wind farm, which will cover 113,000 acres and host 176 turbines once it becomes fully operational in 2026. Moreover, it is invested in low-carbon fuels and renewable natural gas (RNG) as well as distributed energy resources like rooftop solar and battery storage.
Last month, Dominion submitted a request for approval with Virginia’s State Corporation Commission (SCC) to build and operate a new 1GW gas plant to meet surging data center power demand.
The utility company also boasts significant nuclear energy capacity, positioning it perfectly for a diversified future energy mix.
Interestingly, the company has been refocusing on its core operations and making asset divestitures. For instance, in 2023, Dominion Energy signed a deal to sell its natural gas distribution business for $9.4 billion to Enbridge, building on its $3.3 billion divestiture of its stake in a liquefied natural gas venture.
Now, with this diversified energy portfolio, commitment to clean energy transition, and strategic refocus, Dominion Energy has achieved a market cap of $43.3 billion with its shares trading at $50.83, down 5.63% YTD.
Dominion Energy, Inc. (D -2.3%)
Meanwhile, it has an EPS (TTM) of 2.20, a P/E (TTM) of 23.10, and a ROE (TTM) of 7.11%. As for dividend yield, it’s pretty robust at 5.25%, which will appeal to income-focused investors.
The company’s financial health is shown in its results: a net income of $2.1 billion ($2.44 per share) in 2024 compared to $2 billion ($2.33 per share) in the previous year. The company’s operating earnings (non-GAAP) for the year were $2.4 billion ($2.77 per share) compared to $1.7 billion ($1.95 per share) in 2023.
The difference in GAAP and operating earnings was due to nuclear decommissioning trust funds, discontinuing the sale of gas distribution operations, and the mark-to-market impact of economic hedging activities, among other adjustments.
With these numbers, the company delivered in the top half of its guidance range, which was achieved despite worse-than-normal weather in regulated service areas.
“We continued to successfully provide the reliable, affordable, and increasingly clean energy that powers our customers every day while achieving near-record employee safety performance.”
– CEO Bob Blue
For this year, Dominion Energy expects operating earnings to be in the $3.28 to $3.52 per share range while long-term growth guidance is kept at 5% to 7% through 2029.
Overall, these utility stocks don’t just offer reliable dividends; they also show strong financial health that could support long-term growth. So, if you are building an income-focused portfolio, they are worth a serious look. Additionally, your investment helps push the energy sector toward cleaner, more sustainable solutions.
Click here for a list of top dividend stocks for income investors.