Utility stocks are viewed as a safe haven during tariff shocks, providing stability and consistent dividends, making them recession-resistant. Companies in this sector, especially regulated utilities, ensure stable cash flows often shielded from tariffs. The article highlights the AES Corporation's aggressive growth plan in clean energy despite its current debt burden and declining share prices. Investors are encouraged to consider utility stocks as an advantageous investment before the potential tariff pause concludes, aiming to capitalize on their resilience in turbulent market conditions.
Utility stocks are the ultimate safe haven if you're looking to dodge the impact of tariffs. Any new tariff announcement will cause the stock market to react badly. But each tariff shock could disproportionately benefit utility stocks since investors will be rushing in to add ballast to their portfolios.
Businesses in this sector are almost entirely shielded from the impact of tariffs, and this is especially true if you look into regulated utilities. These companies have some of the most stable cash flows in the stock market, and this is cash flow that rarely declines, if ever.
The AES Corporation (NYSE:AES) is a utility and power generation company based in the US. The company has an aggressive growth strategy and is focusing on clean energy to triple its renewables capacity.
Shares are down by over 62% from its peak in late 2022, and this is also due to the company's debt load. It had over $29 billion in debt by the end of 2024, and rising interest rates caused net interest loss to hit $1.1 billion.
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