4 Safe-Haven Utility Stocks to Buy Amid Ongoing Geopolitical Tensions

Volatility has returned to Wall Street amid escalating tensions between Iran and Israel, with the United States gradually getting dragged into it. Although the United States has not yet been directly drawn into the conflict, President Donald Trump is weighing whether to strike Iran.

Given the worsening situation, it would be ideal to invest in safe-haven defensive stocks from the utility sector such as Atmos Energy Corporation ATO, Fortis, Inc. FTS, MDU Resources Group, Inc. MDU and NiSource Inc. NI. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Also, these stocks are from the low-beta category (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high dividend yield and a favorable Zacks Rank.

Geopolitical Tensions Weigh on Markets

U.S. stocks retreated on Tuesday as the Israel-Iran conflict raged for the fifth day, with both nations trading missiles that resulted in the deaths of hundreds. The Dow declined 0.7%, while the S&P 500 and the Nasdaq shed 0.8% and 0.9%, respectively, on Tuesday.

The broader market decline came as Trump threatened Iran in a series of posts made on Truth Social and demanded a surrender. Trump also held talks with his national security team in the Situation Room, while the Pentagon moved four U.S. B-52 Stratofortress bombers to the Diego Garcia military base in the Indian Ocean, which is within the range to strike Iran.

Uncertainty Looms

Inflation has cooled substantially over the past three months and fears of trade war have also alleviated over the past few days. The United States said last week that it has reached a trade deal with China after Trump, in early April, imposed a 145% tariff on all Chinese imports.

China retaliated with 125% tariffs on U.S. imports. However, the tariffs were temporarily halted as several countries started trade negotiations with the White House. Since then, the United States has reached two major trade deals with the United Kingdom and China and more trade deals are expected to be announced soon.

Also, cooling inflation raised hopes that the Federal Reserve would soon resume rate cuts. The optimism surrounding these developments sent markets on a rally but the recent tensions in the Middle East have once again unsettled stocks.

Given this situation, markets could remain volatile for a longer period.

4 Low-Beta Utility Stocks With Upside

Atmos Energy Corporation

Atmos Energy Corporation, along with its subsidiaries, is engaged in the regulated natural gas distribution and storage business. ATO serves nearly 3.3 million customers in more than 1,400 communities across eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energyoperates more than 73,000 miles of transmission and distribution lines as well as 5,700 miles of interstate pipelines.

Atmos Energy has an expected earnings growth rate of 6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. ATO presently carries a Zacks Rank #2. Atmos Energy has a beta of 0.71 and a current dividend yield of 2.27%.

Fortis, Inc

Fortis, Inc. is engaged in the electric and gas utility business. FTS offers regulated utilities comprising electric and gas, as well as engages in non-regulated hydroelectric operations. Fortis operates primarily in Canada, the United States and the Caribbean.

Fortis has an expected earnings growth rate of 3.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the last 60 days. Currently, FTS carries a Zacks Rank #2. Fortis has a beta of 0.49 and a current dividend yield of 3.70%.

MDU Resources Group

MDU Resources Group, Inc. provides value-added natural resource products and related services that are essential for energy transportation and regulated energy delivery services to its customers.

MDU Resources has an expected earnings growth rate of 5.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 60 days. MDU currently carries a Zacks Rank #2. MDU Resources has a beta of 0.72 and a current dividend yield of 3.18%.

NiSource Inc.

NiSource Inc., together with its subsidiaries, provides natural gas, electricity, and other products and services in the United States. NI’s operating subsidiaries deliver energy to roughly 3.7 million customers in six states — Ohio, Pennsylvania, Virginia, Kentucky, Maryland and Indiana. NiSource has one of the nation’s largest natural gas distribution networks, as measured by the number of customers.

NiSource has an expected earnings growth rate of 7.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the past 60 days. NI presently has a Zacks Rank #2. NiSource has a beta of 0.54 and a current dividend yield of 2.83%.

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This article originally published on Zacks Investment Research (zacks.com).

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