It is human nature to want to jump on the what's hot bandwagon and ignore what is considered boring. Long considered the domain for “widows and orphans,” utilities have developed a somewhat stodgy reputation. Why are utilities considered good for widows and orphans? Here a few reasons:
1. They are generally less volatile than the market (low beta).
2. They sell what people need no matter what the economy is doing; thus,
3. Their dividends tend to be more stable and secure.
Utilities have their own special set of challenges. Their debt and shares outstanding tend to grow over time — not the preferred direction for either. Also, there are industry specific issues that utilities face, such as radioactive waste for nuclear power plants and air pollution for old coal-fired generators. However, despite their risks, utility dividend stocks have been, and will continue to be, a cornerstone for conservative income investors.
This week week, I screened my dividend growth stocks database for utilities with a yield at or above 4% and a dividend growth rate above 1%. The results are presented below:
Southern Company (NYSE:SO)
Yield: 4.2% | Dividend Growth Rate: 3.6%
Southern Company is an Atlanta-based energy holding company that is one of the largest producers of electricity in the U.S.
Black Hills Corporation (NYSE:BHK)
Yield: 4.3% | Dividend Growth Rate: 1.4%
Black Hills Corp. is a diversified South Dakota-based holding company that encompasses electric utility and integrated energy businesses.
Avista Corporation (NYSE:AVA)
Yield: 4.3% | Dividend Growth Rate: 8.8%
Avista Corp. generates, transmits and distributes energy as well as engages in energy-related businesses. The company operates in two business segments.
Scana Corporation (SCG)
Yield: 4.3% | Dividend Growth Rate: 1.6%
Scana Corporation is an energy-based holding company that provides electric, natural gas, and telecommunications services.
Atmos Energy Corp. (NYSE:ATO)
Yield: 4.3% | Dividend Growth Rate: 1.5%
Atmos Energy Corp. distributes and sells natural gas to residential, commercial, industrial and agricultural customers, and also conducts non-utility operations.
AGL Resources, Inc. (NYSE:GAS)
Yield: 4.3% | Dividend Growth Rate: 2.3%
Nicor Inc. provides natural gas to about 2.3 million customers, provides asset management services, and operates a fiber optic network.
UniSource Energy (NYSE:UNS)
Yield: 4.4% | Dividend Growth Rate: 7.7%
Unisource Energy, through Tucson Electric Power Co., provides regulated electric service to over 403,000 retail customers in southeastern Arizona.
Westar Energy, Inc. (NYSE:WR)
Yield: 4.6% | Dividend Growth Rate: 2.5%
Westar Energy, Inc. provides electric generation, transmission and distribution services to apx. 685,000 customers in Kansas as of December 31, 2009.
Vectren Corporation (NYSE:VVC)
Yield: 4.7% | Dividend Growth Rate: 1.5%
Vectren Corp. is an energy holding company that delivers gas and/or electricity to more than one million utility customers in Indiana and Ohio, and offers other energy related products and services.
Duke Energy (NYSE:DUK)
Yield: 4.7% | Dividend Growth Rate: 2.1%
Duke Energy Corp. provides service to 3.9 million electric customers in North Carolina, South Carolina, Indiana, Ohio and Kentucky, and 500,000 gas customers in Kentucky and Ohio.
Teco Energy Inc. (NYSE:TE)
Yield: 4.8% | Dividend Growth Rate: 15.0%
TECO Energy Inc. owns Tampa Electric Co., which serves the Tampa Bay region in west central Florida and has significant diversified operations related to its core business.
As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the more than 200 companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long SO, AVA, UNS, VVC, TE in my High-Yield Portfolio. See a list of all my Dividend Growth holdings here.
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- Seven Dividend Stocks Trading Below Fair Value
- High Yield Dividend Stocks in Gurus' Portfolio
- Top dividend stocks of Warren Buffett
- Top dividend stocks of George Soros
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