Utilities luring Microsoft, Google and Amazon

Hoham Utilities stock hasn't had a great year at all in recent months, but it's enjoying one of its best years in recent memory, up more than 29%, outpacing the S&P 500's 23% gain.

Kevin Mahn, president and chief investment officer at Hennion & Walsh Asset Management, told FOX Business that even with progress, utilities will see further tailwinds.

“They generally tend to offer the potential for high levels of recurring income through dividends, and now that we are heading into a lower interest rate environment, the dividends they pay could become increasingly attractive to investors. Maan also mentioned the group's role in artificial intelligence. “They are a backdoor play into the AI ​​revolution,” he said.

Mahn said the Utilities Select Sector SPDR Fund (XLU) is a broad-based exchange-traded fund that covers a wide range of sectors and also recommends individual names, some of which are included in this ETF. That's what it means.

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Constellation Energy, one of Mr. Mahn's top candidates, just signed a 20-year power contract with Microsoft that will help power the Pennsylvania region following a partial shutdown that forced mass evacuations in 1979. The state's Three Mile Island will be reopened.

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“Other utilities like Southern Company and Duke Energy also own nuclear power plants, so that's often the way forward. So right now, utilities are seeing a very interesting area of ​​the market. “I really think it's becoming,” Maan added.

Other large-cap utility ETFs include Global X US Infrastructure Development ETF; Vanguard Utilities ETF and iShares Global Infrastructure ETF tracked by VettaFi.

David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, which counts utilities among its top sectors, is also betting on future demand.

“I think there's something changing with the power companies…We're actually in a situation where we're looking at some pretty aggressive demand for power for the first time in decades,” he said on the show “Making Money with Charles Payne.” I'm seeing it firsthand,” he said.

Last week, Amazon signed three agreements to develop nuclear power projects ahead of Microsoft.

The company has signed a deal with utility conglomerate Energy Northwest and developer X-Energy to build multiple small modular reactors (SMRs) in the area, and with Virginia's Dominion Energy to boost output in the area. We have signed a contract to explore the development of another SMR. .

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Like Google, it has signed an agreement with Kairos Power to bring Kairos' first SMR online by 2030, with additional deployments to follow through 2035.