Electric Utility Stocks Pay Steady Dividends

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 be in trouble - 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 20 electric utilities with solid dividends. Some of these companies have natural gas operations. These stocks are worth considering for a dividend reinvestment portfolio.

Electric Utility Portfolio
Company and Web Site	Quote	Annual Dividend and Yield	Service Areas
Ameren*	AEE	$2.54 (5.60%)	Illinois and Missouri
Central Vermont Public Service	CV	$0.92 (4.00%)	Vermont
Constellation Energy Group*	CEG	$1.91 (2.10%)	Central Maryland and across the U.S.
Dominion Resources*	D	$1.58 (3.60%)	Virginia, North Carolina, Ohio and Pennsylvania
DPL Inc	DPL	$1.10 (4.20%)	West central Ohio
Duke Energy*	DUK	$.88 (4.80%)	North Carolina, South Carolina, Indiana, Kentucky and Ohio
Energy East*	EAS	$1.24 (5.00%)	New York, Connecticut, Maine, and Massachusetts
Entergy*	ETR	$3.00 (2.70%)	Arkansas, Mississippi, Texas, and Louisiana
Exelon Corporation*	EXC	$2.00 (2.40%)	Illinois and Pennsylvania
FirstEnergy	FE	$2.20 (3.00%)	Ohio, New Jersey, and Pennsylvania
FPL Group	FPL	$1.78 (2.70%)	Florida
Great Plains Energy	GXP	$1.66 (6.70%)	Kansas and Missouri
Hawaiian Electric Industries	HE	$1.24 (5.00%)	Hawaii
National Grid*	NGG	$2.43 (3.40%)	Northeastern U.S. and Great Britain
Progress Energy	PGN	$2.46 (5.80%)	North Carolina, South Carolina and Florida
Public Service Enterprise Group*	PEG	$1.29 (3.10%)	New Jersey
SCANA Corporation*	SCG	$1.84 (4.80%)	North Carolina, South Carolina and Georgia
Southern Company	SO	$1.61 (4.40%)	Alabama, Florida, Georgia and Mississippi
Unitil*	UTL	$1.38 (5.10%)	Massachusetts and New Hampshire
Wisconsin Energy Corp*	WEC	$1.08 (2.40%)	Wisconsin and Michigan
NOTE: Dividend data are from finance.yahoo.com as April 11, 2008. An * denotes a natural gas business as well as electricity.

The iShares Dow Jones US Utilities (IDU) tracks the Dow Jones Utilities Average.

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Why Dividends Matter

Updated April 11, 2008.