Portfolio of Electric Utilities Stocks

Well-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 & Price Chart

Symbol

Dividend (Yield) &
Chart

Recent Dividends &
Growth Rate

American Electric Power AEP$2.68 (3.60%)
Consolidated EdisonED$2.86 (3.77%)
Dominion ResourcesD$3.34 (4.78%)
Duke EnergyDUK$3.71 (4.39%)
EntergyETR$3.64 (4.24%)
Hawaiian Electric IndustriesHE$1.24 (3.46%)
PPL CorporationPPL$1.64 (5.56%)
Southern EnergySO$2.40 (5.15%)
Wisconsin EnergyWEC$2.21 (3.18%)
Dividend data from Quandl as of Jan-12-2019.



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.

All 9 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.

The current value of a $10,000 investment is $33,549. The percent return is 235.49%. The annualized return is 12.87%.


NOTE: The stocks included in the table and chart are representative of the industry. They are not recommendations.

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