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On April 3, Wall Street bled following the imposition of “Liberation Day” tariffs by President Donald Trump. Three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — plummeted 4%, 4.8% and 6%, respectively, recording the worst single-day performance since the days of coronavirus breakout in 2020. Both the S&P 500 and the Nasdaq Composite are currently in correction territory.
The baseline tariff of 10% will be imposed on all imports from April 5. But the important thing is that tariff rates will go up to as high as 54% on countries depending on what rate those governments will levy duties on U.S. exports.
Economists and financial experts are highly concerned about the effect of these tariffs on U.S. economic growth, especially on inflation, which is already elevated and remained sticky despite a 1% cut in the benchmark interest rate by the Fed last year. Market participants fear a near-term recession and, in the worst case, a stagflation in the U.S. economy.
At this juncture, investment in low-beta stocks with high dividend yields and a favorable Zacks Rank will be the best option. If markets regain momentum, the favorable Zacks Rank of these stocks will capture the upside potential. However, if the downtrend continues, low-beta stocks will minimize portfolio losses and dividend payments will act as a regular income stream.
Five such stocks are Atmos Energy Corp. ATO, WEC Energy Group Inc. WEC, Exelon Corp. EXC, CMS Energy Corp. CMS and CenterPoint Energy Inc. CNP. Each of these stocks has provided double-digit returns year to date defying severe headwinds facing U.S. stock markets.
Utilities are mature and fundamentally strong as demand for such services is generally immune to the changes in the economic cycle. Such companies provide basic services like electricity, gas, water and telecommunications, which will always be in demand.
Adding stocks from the utility basket usually lends more stability to a portfolio in uncertain market conditions. Moreover, the sector is known for the stability and visibility of its earnings and cash flows. Stable earnings enable utilities to pay out consistent dividends that make them more attractive to income-oriented investors.
Here are five low-beta (beta >0<1) high-yielding (dividend yield more than 2%) stocks that have strong growth potential for 2025. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Atmos Energy continues to benefit from rising demand for natural gas, courtesy of an expanding customer base. ATO’s long-term investment plan should further increase the reliability of its natural gas pipelines.
ATO gains from industrial customer additions and constructive rate outcomes. Returns within a year of capital investment should further boost its performance. ATO has enough liquidity to meet its near-term debt obligations.
ATO has been expanding its renewable natural gas (“RNG”) operation to help its customers achieve their environmental objectives. It now has seven flowing RNG facilities directly connected to the system.
Atmos Energy also executed interconnect agreements with three additional RNG projects. ATO’s RNG strategy is built on partnerships with landfills, dairies and others to transport waste-derived energy to fuel homes, businesses and even vehicles.
Atmos Energy has expected revenue and earnings growth rates of 16.5% and 5.1%, respectively, for the current year (ending September 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days. ATO has a beta of 0.69 and a current dividend yield of 2.24%.
WEC Energy Group continues to benefit from contributions from its organic and inorganic assets. WEC’s strategic investments should strengthen its infrastructure and enable it to serve its customer base efficiently. LNG facilities and renewable assets should assist WEC in achieving its net carbon-neutral target by 2050.
Improving demand from large and small commercial and industrial (C&I) and residential customers is boosting its performance. WEC Energy has sufficient liquidity to meet its near-term debt obligations. We expect total revenues to improve in the 2025-2027 period.
WEC Energy Group has an expected revenue and earnings growth rate of 9.2% and 8.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days. WEC has a beta of 0.44 and a current dividend yield of 3.28%.
Exelon’s investment will strengthen its transmission and distribution infrastructure and assist in providing reliable services to customers. EXC’s initiatives in grid modernization will improve the resilience of its operations, and revenue decoupling will mitigate the impact of load fluctuation. A stable cash flow allows EXC to pay regular dividends. The development of data centers will increase demand.
Exelon has an expected revenue and earnings growth rate of 3.4% and 6.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last seven days. EXC has a beta of 0.39 and a current dividend yield of 3.48%.
CMS Energy remains one of the primary utility providers in Michigan. CMS plans to invest $20 billion in infrastructure upgrades, repair and clean energy generation during 2025-2029. In November 2024, CMS filed its 20-year renewable energy plan, which includes the addition of nine GW of solar and four GW of wind to its generation portfolio during 2025-2045. Our projection is that total revenues will improve year over year in the 2025-2027 period.
CMS Energy has an expected revenue and earnings growth rate of 7.3% and 7.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. CMS has a beta of 0.34 and a current dividend yield of 2.91%.
CenterPoint Energy is likely to benefit from increasing electricity demand, backed by rapid electrification of transportation amid rising investments in renewable energy. CNP aims to invest substantially in upgrading its infrastructure. Successful returns from these investments should boost CNP’s long-term growth. CNP boasts a solid solvency position.
With the rapid electrification of the transportation sector, backed by growing clean energy adoption among industries across the board, the utilization of electric vehicles (EVs) has increased manifold in recent times.
To tap the growth benefits of the EV market, CenterPoint Energy has been investing significantly in building a smarter, cleaner and more resilient ecosystem to meet the needs of EV drivers and fleet operators. To this end, CNP has been actively promoting off-road electrification, including electric forklifts and carts.
CenterPoint Energy has an expected revenue and earnings growth rate of 3.2% and 8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. CNP has a beta of 0.65 and a current dividend yield of 2.38%.
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This article originally published on Zacks Investment Research (zacks.com).
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