WEC Energy Is A Top Pick For Investors Seeking Utility Exposure

WEC Energy (WEC), a member of IBD’s Utility Leaders List, is a stock that’s a top choice for conservative investors, thanks to its steady earnings and consistent dividend growth.

The company provides electricity and natural gas services to 4.7 million customers across Wisconsin, Minnesota, Michigan, and Illinois.

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Last featured in this column in September, WEC is back in the spotlight following a reaffirmation of its own outlook, another dividend increase, and share strength — with the stock recently hitting its latest buy point.

Like many utility stocks, WEC is expected to benefit from accelerated earnings growth driven primarily by data center demand. After reporting earnings of $4.81 a share last year, analysts expect profits of $5.59 this year and $6 in 2027.

Results could come in even stronger given the company’s impressive track record. WEC has met or exceeded the top end of its own earnings outlooks for 22 consecutive years.

To meet rising energy demand, WEC plans a $37.5 billion capital investment over the next four years. The company remains well-positioned to fund this buildout.

WEC Stock: Investment Grade Debt

S&P Global rates its debt firmly in investment grade at “A-”. That also makes the stock a strong choice for conservative investors seeking capital preservation.

Still, risks remain. These include execution challenges on large-scale projects and uncertainty around the ultimate scope of data center demand. A significant pullback in demand could weigh on shares.

While a 3.3% yield is lower than many stocks featured in this column, dividend growth has been robust. The company once again hiked its distribution last quarter, for the 23rd consecutive year, to 95.25 cents.

With strong earnings growth, the company expects further sizable distribution increases. The company also targets 6.5% to 7% annual distribution growth.

Shares of WEC Energy broke out of a cup with handle, passing a 116.52 buy point on Feb. 17. The stock has since fallen slightly and currently sits just outside a buy zone, according to MarketSurge pattern recognition.

Steven Bell is a writer and trader based out of Vancouver, British Columbia. He is the author of IBD’s Income Investor column, focused on shedding insight on low-risk, underfollowed stocks.

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