The utilities sector has historically doubled up as a safe-haven option for investors during recessions and economic downturns because of its reputation for rewarding shareholders with dividends. Similarly, they fall out of favor during times of economic growth, with growth stocks driving the markets.

Utility stocks are very slightly affected, if at all, by market volatility because of their intrinsic defensive nature. They protect investments when the goings are not good. Whatever the state of the economy, a household or a business needs its electricity, water, or gas supplies. After the 2008 sub-prime crisis, the Fed cut interest rates to stimulate the economy. On cue, investors flocked to utilities, which are viable defensive choices during macroeconomic downturns.

Since the beginning of the year, or more accurately, the start of Trump’s second presidency, markets have remained extremely volatile based on the administration’s tariff announcements and consequent step-backs. Reciprocal tariff announcements by trading partners have also stoked inflation fears, even as they have cooled down in recent months.

On Wednesday, March 12, the consumer price index report showcased that inflation in February had cooled for the first time in over three months. Producer prices came in even better and unchanged. However, with the onslaught of tariff announcements witnessed over February, one would have to carefully monitor these numbers over the next couple of months to see what impact the current U.S. trade policy actually has on prices. The sector has started to move in the right direction already in 2025, with the S&P 500 Select Sector SPDR (XLU) advancing 4.6% year to date as of March 17, 2025.

In addition, utilities are usually considered long-term buy-and-hold options as they regularly declare dividends, and dividend yields on utility stocks are generally higher than those paid by other equities. In this environment, utility stocks provide much-required stability and growth potential. Hence, astute investors should consider such stocks at present.

Our Choices

The stocks below flaunt a Zacks Rank #1 (Strong Buy) or Rank #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.

Southwest Gas Holdings, Inc. SWX is a distributor and transporter of natural gas. SWX’s expected earnings growth rate for the current year is 17.1%. The Zacks Consensus Estimate for its next-year earnings has improved 4.2% over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.

UGI Corporation UGI is an integrated gas distributor and markets energy products and related services. UGI’s expected earnings growth rate for the next year is 1.6%. The Zacks Consensus Estimate for its current-year earnings has improved 2.7% over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.

Grupo Televisa, S.A.B. TV owns and operates cable companies and provides direct-to-home satellite pay television systems. TV’s expected earnings growth rate for the current year is 97.6%. The Zacks Consensus Estimate for its current-year earnings has improved 71.4% over the past 60 days. This Zacks Rank #2 company has a VGM Score of A.

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

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