Portfolio of Electric Utilities StocksWell-managed electric utilities are excellent candidates for a dividend reinvestment portfolio. Typically, electric utilities generate lots of excess cash and pay it out as dividends to shareholders.
Look for a company that has consistent earnings growth, a long history of rising dividends and a reasonable payout ratio, which is the ratio of dividends to earnings. A low payout ratio (less than 70 percent) indicates the possibility of future dividend increases. A very high payout ratio (greater than 90 percent) may not be sustainable and may signal a dividend cut in the future.
If the dividend yield (annual dividend divided by stock price) is very high (greater than six or seven percent) the company may have problems - the high yield may be due to a low stock price. Be very wary of stocks with high dividend yields and high payout ratios.
The following table includes 9 electric utilities that have multiyear histories of increasing their dividends. These stocks are worth considering for a dividend reinvestment portfolio.
|9 Dividend-Paying Electric Utilities Stocks|
Stock Return & Price Chart
Dividend (Yield) &
Recent Dividends &
|American Electric Power||AEP||$2.68 (3.30%)|
|Consolidated Edison||ED||$2.96 (3.59%)|
|Dominion Resources||D||$3.67 (4.95%)|
|Duke Energy||DUK||$3.71 (4.14%)|
|Hawaiian Electric Industries||HE||$1.28 (3.34%)|
|PPL Corporation||PPL||$1.64 (5.10%)|
|Southern Energy||SO||$2.40 (4.83%)|
|Wisconsin Energy||WEC||$2.36 (3.09%)|
|Dividend data from Quandl as of Mar-01-2019.|
stocks are included in the portfolio computations. The current value of the portfolio assumes that $1,111.11 was invested (total of $10,000) in each stock at its closing monthly price for the current date in 2009. All prices are adjusted for splits and dividends.
To inspect the performance of the Dividend-Paying Electric Utilities Stocks portfolio, see the chart of portfolio below. Portfolio values are computed using monthly closes for stocks from Quandl.
The current value of a $10,000 investment is $36,552. The percent return is 265.52%. The annualized return is 13.84%.