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Recession-Proof Income: Utilities Shine

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  Published in Stocks and Investing on Sunday, February 15th 2026 at 17:44 GMT by The Motley Fool
      Locales: Texas, Illinois, Pennsylvania, UNITED STATES

The Power of Passive Income in a Downturn

Recessions are characterized by a contraction in economic activity, often accompanied by rising unemployment and decreased consumer spending. During these periods, cyclical businesses - those heavily reliant on consumer discretion - typically experience significant revenue declines. Think of luxury goods, travel, or even discretionary entertainment. However, certain sectors are remarkably insulated from these downturns because they provide essential goods and services. These 'necessity' businesses experience relatively stable demand, regardless of the economic climate. Utilities, consumer staples, and healthcare are prime examples.

Utilities, in particular, stand out due to the non-negotiable nature of their offerings. Electricity, natural gas, and water are fundamental to modern life, and demand remains relatively constant even when households and businesses tighten their belts. This consistent demand translates to predictable revenue and cash flow, providing a solid foundation for maintaining - and even increasing - dividend payments. This stability is increasingly attractive as interest rates remain volatile, and investors seek safer avenues for returns.

Beyond the Basics: NextEra Energy (NEE) - A Renewable Energy Leader

NextEra Energy is not your typical utility company. While it provides essential electricity services to millions, it has aggressively positioned itself as a leader in renewable energy generation, particularly wind and solar power. This strategic focus differentiates it from many of its peers and provides several distinct advantages in the current economic landscape.

• Growth Potential: The global transition to cleaner energy sources is a long-term trend, driven by environmental concerns, government regulations, and decreasing costs of renewable technologies. NextEra is at the forefront of this shift, benefiting from substantial government subsidies, tax credits, and growing demand for sustainable energy solutions. This positions the company for continued growth, even during a recession.
• Diversified Revenue Streams: While traditional utilities rely heavily on regulated rates, NextEra's renewable energy projects generate revenue through power purchase agreements (PPAs) and other long-term contracts. This diversified revenue stream reduces its exposure to regulatory risks and enhances its financial stability.
• Dividend History & Yield: As of February 15th, 2026, NextEra Energy boasts a dividend yield of approximately 2.3%. While not the highest yield available, its consistent dividend growth and strong financial performance make it a compelling choice for long-term investors. The company has a proven track record of increasing its dividend payout annually, demonstrating its commitment to shareholder returns.

Duke Energy (DUK): A Traditional Utility with a Robust Infrastructure

Duke Energy represents a more traditional approach to the utility sector. Serving customers in the Southeast and Midwest, it's a well-established company with a long history of providing reliable electricity and natural gas services. While not focused on renewables to the same extent as NextEra, Duke Energy remains a resilient investment due to its strategic infrastructure investments and commitment to shareholder value.

• Infrastructure Investment: Duke Energy consistently invests in upgrading and maintaining its infrastructure, ensuring the reliability and efficiency of its services. These investments are particularly crucial during economic downturns, as they help prevent disruptions and maintain service quality. This also opens up opportunities for modernization grants and funding.
• Stable Regulatory Environment: As a regulated utility, Duke Energy operates within a relatively stable regulatory framework. This provides a degree of predictability and protects it from the intense competition faced by companies in other sectors.
• Attractive Dividend Yield: Duke Energy currently offers a dividend yield of around 4.1% - significantly higher than NextEra's. This makes it particularly appealing to income-seeking investors, especially those in retirement.

Building a Recession-Resilient Portfolio

While NextEra and Duke Energy represent excellent starting points, a truly recession-resistant portfolio requires diversification. Consider combining these dividend stocks with other resilient sectors like consumer staples (e.g., Procter & Gamble, Nestle) and healthcare (e.g., Johnson & Johnson, UnitedHealth Group). Diversification helps mitigate risk and ensures that your portfolio can weather various economic scenarios.

Disclaimer: The author owns shares of (NEE) and (DUK). This is for informational purposes only and not financial advice. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.