My 3 Favorite Diversified Utilities with Highest Dividend Yields

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Mar 06, 2013
A safe and high income is a dream for most of us. For sure, safe and high incomes without any kind of risk are impossible, but out there are still some sectors and industries with companies which have a high possibility to fulfill these items. Let me mention one thing: Safe dividends do not exist and a safe dividend is no growing dividend. If your income does not grow over the long-run, you will get poorer and poorer due to the inflation pressure.

Not enough, if your company does not hike prices and grow it will lose earnings and must cut dividends in the future. Growth is the key and not safe dividends. Today I would like to scout the utility sector by the highest dividend-paying opportunities. The sector is one of the smallest branched ones because of its five sub industries. I will focus on the diversified utility industry today which already has 24 stocks listed. The industry is the highest dividend-paying one (4.64 percent average yield) from the utility sector and also the biggest branch with a total market capitalization of $11.41 trillion.

Nearly all 22 companies from the diversified utility industry pay dividends. Linked is a small table with some fundamentals of the highest dividend paying stocks with a market capitalization of more than USD2 billion. It’s always good to have a bigger stock with a diversified business model.

Thirteen diversified utilities fulfilled my criteria of which five have a current buy or better rating.

Here are my favorite stocks:

Public Service Enterprise Group (PEG) has a market capitalization of $16.92 billion. The company employs 9,798 people, generates revenue of $9.781 billion and has a net income of $1.275 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.299 billion. The EBITDA margin is 33.73 percent (the operating margin is 22.95 percent and the net profit margin 13.04 percent).

Financial Analysis: The total debt represents 25.85 percent of the company’s assets and the total debt in relation to the equity amounts to 76.09 percent. Due to the financial situation, a return on equity of 12.11 percent was realized. Twelve trailing months earnings per share reached a value of $2.51. Last fiscal year, the company paid $1.42 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 13.30, the P/S ratio is 1.72 and the P/B ratio is finally 1.56. The dividend yield amounts to 4.34 percent and the beta ratio has a value of 0.43.

Westar Energy (WR) has a market capitalization of $4.07 billion. The company employs 2,313 people, generates revenue of $2.261 billion and has a net income of $282.46 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $809.93 million. The EBITDA margin is 35.81 percent (the operating margin is 24.86 percent and the net profit margin 12.49 percent).

Financial Analysis: The total debt represents 36.77 percent of the company’s assets and the total debt in relation to the equity amounts to 117.64 percent. Due to the financial situation, a return on equity of 9.63 percent was realized. Twelve trailing months earnings per share reached a value of $2.15. Last fiscal year, the company paid $1.32 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 14.94, the P/S ratio is 1.79 and the P/B ratio is finally 1.39. The dividend yield amounts to 4.27 percent and the beta ratio has a value of 0.53.

Northeast Utilities (NU) has a market capitalization of $13.37 billion. The company employs 6,063 people, generates revenue of $6.273 billion and has a net income of $533.08 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.637 billion. The EBITDA margin is 26.10 percent (the operating margin is 17.82 percent and the net profit margin 8.50 percent).

Financial Analysis: The total debt represents 32.38 percent of the company’s assets and the total debt in relation to the equity amounts to 97.59 percent. Due to the financial situation, a return on equity of 7.94 percent was realized. Twelve trailing months earnings per share reached a value of $1.91. Last fiscal year, the company paid $1.31 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 22.25, the P/S ratio is 2.12 and the P/B ratio is finally 1.44. The dividend yield amounts to 3.48 percent and the beta ratio has a value of 0.43.

Take a closer look at the full list of the highest dividend paying diversified utilities. The average P/E ratio amounts to 19.37 and forward P/E ratio is 16.76. The dividend yield has a value of 4.17 percent. Price to book ratio is 1.84 and price to sales ratio 1.43. The operating margin amounts to 10.98 percent and the beta ratio is 0.61. Stocks from the list have an average debt to equity ratio of 1.87.

Related stock ticker symbols:

TAC, EXC, AEE, PEG, VVC, WR, CNP, NVE, NU, NI, UGI, MDU, NRG, ETE

Selected Articles:

· 12 Best Yielding Utilities With Double-Digit EPS Growth Potential

· 20 Stocks To Buy | The Most Recommended Utilities At The Market

· Best Utility Dividend Stock Picks For 2013

· 10 Large Cap Utilities With Highest Expected EPS Growth

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Highest dividend paying diversified utilities originally published at long-term-investments.blogspot.com.