Boring utility stocks have been remarkably hot in recent months due to investors piling into more defensive picks as tech stocks crater. Utility giant Consolidated Edison (NYSE:ED) has surged over 26.4% year-to-date. This is a company that hasn’t really delivered any meaningful gains, and investors mostly bought it for the dividend yield. However, considering these stocks are very insulated from tariff stocks, many are taking a closer look.
Tech darlings have hemorrhaged value, and the Nasdaq experienced its worst decline since the 2022 selloffs. In the meantime, defensive names like ED have flourished. President Trump's aggressive global tariff initiatives have severely impacted tech companies and will likely continue to do so even if he rolls back some tariffs. The average tariff rate is many times higher than it was just a few months back
This brings up the risks of a possible recession soon. The Federal Reserve is delaying rate cuts due to the possibility of tariffs causing inflation to tick up and then cause stagflation. Even Trump himself warned of a “slowing” if Jerome Powell did not cut interest rates fast enough. As such, investors are looking for two things:
ED stock fits those two requirements very well.
I believe ED stock still has room to run. There is unprecedented demand for electric infrastructure as data centers are still being built out, and electric vehicles are likely to pick up in sales once interest rates eventually come down.
ED stock has a lot to gain from these megatrends. You’re buying into a regulated monopoly in one of America's most densely populated regions, and one that yields over 3% in dividends.
