Meeting the insatiable demand for energy has been accentuated by the rapid growth of AI data centers. By 2030, it is estimated that they will consume 9% of all locally produced electricity. This is causing many power companies to turn to nuclear reactors and various kinds of renewable and clean energy options. Two major players in the utility sector are Duke Energy Corporation (NYSE:) And NRG Energy Inc (NYSE:). The two electric companies cover more than 15 million customers and are located in more than 20 states. The most obvious distinction between the two is that Duke Energy is a regulated utility while NRG is engaged in competitive, deregulated energy markets. For investors, the question is which stock can generate the most gains in 2025? Here’s a breakdown of the two companies to help you make a decision.
Duke Energy: A Classic Business Model for Utilities
When you think of a typical utility company, Duke Energy should come to mind. Its main business is electricity and regulated utilities. Duke owns and operates power plants, transmission lines and distribution networks that provide electricity and natural gas to its 8.2 million customers, primarily in the South. Duke is targeting zero net methane emissions from its natural gas business by 2030 and net zero carbon emissions from electricity generation by 2050. The company is relatively low risk, except for its exposure to hurricane season in Florida. In fact, Duke expects restoration costs of up to $2.9 billion for the 2024 hurricane season, which was devastated by Milton, Debby and Helene. The company had to restore 5.5 million outages during the historic storm season.
The stock is a Dividend Aristocrat that currently pays an annual dividend yield of 3.82%. At the current PE of 20.10, the stock is trading at a discount to its 2023 and 2024 PEs of around 31.
Stable results in the third quarter of 2024 and reaffirmed guidance
Utilities are generally boring stocks that generate predictable, stable and regular income. Duke Energy did not disappoint in breaking the mold in the third quarter of 2024. The company reported EPS of $1.62, beating consensus…
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