3 Utilities That Love To Light Up Their Dividends
Looking for a utility company that’s not shy about paying a decent dividend?
Here are three that each pay a yield above the 4.5% mark… and none of them come with the risk of a high payout ratio that can easily send future dividends plunging.
The Aloha Dividend Stock
You get a little something thrown in when you invest in Hawaii’s #1 electric utility company.
A bank.
That’s because Hawaiian Electric (HE) owns one of the Hawaii’s top 5 banks, American Savings Bank.
And you also get a good deal, because the Hawaiian Electric stock price has been skidding over the past year.
What’s the trouble in paradise? The bank’s performance hasn’t been that great.
But utility revenues are strong and costs are being managed well.
We like HE and the big mutual funds like Hawaiian Electric too… Vanguard and Fidelity are the utility’s two largest shareholders.
Hawaiian Electric Industries (HE)
Dividend Yield: 5.10%
Annual Payout: 1.24
Payout Ratio: 76.5%
The Hotter And Muggier It Gets, The More Money You Make
The air conditioners keep blasting away.
People in Tampa keep sending checks into Tampa Electric every month.
And investors in TECO Energy, Inc. (TE) keep piling up the dividends.
But what about when the weather turns cold?
Well, it turns out a chilly Florida winter had people cranking up the thermostats so Tampa Electric cranked out some strong earnings to start off 2014.
Any concerns about this dividend paying utility stock?
Not really, unless you’re worried that the coal mines it owns in Kentucky and Virginia could be hit with tough new regulatory fees.
The risk is coal prices going down too much. The company’s coal business drives 17.4% of its revenues.
TECO Energy, Inc. (TE)
Dividend Yield: 4.86%
Annual Payout: .88
Payout Ratio: 86.3%
Cash Clouds Are Lifting Over Connecticut
You know where the General Electric corporate headquarters is?
Fairfield, Connecticut. A quiet town served by a quiet utility company that’s been in the power business for more than a hundred years.
The United Illuminating Company is part of UIL Holdings (UI). UIL also owns the Connecticut Natural Gas Corporation, The Southern Connecticut Gas Company, and The Berkshire Gas Company.
Roll them up and what do you see when you look under the hood at the financials?
Some solid performance… Earnings per share are up over the past five quarters.
The good news for you… most investors haven’t noticed.
But the stock price is down more than 10% over the past year.
So here’s what’s going on. A shaky balance sheet is scaring off a lot of investors who would otherwise be all over UIL.
While most investors see a lot of debt, which we see too, we’re impressed by the utility’s cash position. In less than a year, it’s soared by more than $100 million, so we’re ready for better times ahead.
UIL Holdings (UIL)
Dividend Yield: 4.69%
Annual Payout: 1.73
Payout Ratio: 75.9%
Best Regards,
Michael Jennings
Category: Dividend Stocks
