Portfolio of Electric Utility 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 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 12 electric utilities that have multiyear histories of increasing their dividends. These stocks are worth considering for a dividend reinvestment portfolio.
| Electric Utilities Stocks | |||||||
Stock | Quote | Dividend & Dividend Yield | Interactive Price Chart | ||||
| American Electric Power | 1.96 (3.90%) |
||||||
| Consolidated Edison | 2.46 (4.00%) |
||||||
| Dominion Resources | 2.25 (3.70%) |
||||||
| Duke Energy | 3.06 (4.30%) |
||||||
| Entergy | 3.32 (4.70%) |
||||||
| Exelon | 1.24 (3.50%) |
||||||
| FirstEnergy | 2.20 (5.00%) |
||||||
| NextEra Energy | 2.64 (3.30%) |
||||||
| NiSource | 1.00 (3.40%) |
||||||
| PPL Corporation | 1.47 (4.60%) |
||||||
| Southern Energy | 2.03 (4.40%) |
||||||
| UniSource Energy Company | 1.74 (3.40%) |
||||||
To follow the day-to-day progress of the Electric Utilities Stocks portfolio, check out the returns table and chart below. Dollar values are computed using weekly closes for stocks from Yahoo! Finance. All 12 stocks are included in the chart computations. The current value of the portfolio assumes that $833.33 was invested (total of $10,000) in each stock at its closing weekly price for the first week of January 2003.
|
Electric Utilities Stocks - Return Results | |
| Portfolio: | Electric Utilities Stocks |
| Start date: | Jan-02-2003 |
| Start value: | $10,000 |
| End date: | May-22-2013 |
| End value: | $28,154 |
| Number prices | 543 |
| Minimum value occurred on Feb-10-2003 | $8,942 |
| Maximum value occurred on Apr-29-2013 | $28,662 |
| Total gain or loss (Start date to End date) | 181.54% |
| Annualized gain or loss (Start date to End date) | 10.42% |
| Sharpe Ratio | 0.79 |
| Total dollar value on End date of a $10,000 purchase made on Start date | $28,154 |
| Average percent return for all possible buy/sell combinations | 34.92% |
| Number returns | 147,153 |
| Number profitable returns (Winners) | 125,600 |
| Percent profitable returns | 85.35% |
| Number unprofitable returns (Losers) | 21,553 |
| Percent unprofitable returns | 14.65% |
| Winners to losers ratio | 5.83 |
Click chart to enlarge it. |
Related Articles
Utilities Exchange-Traded Funds (ETFs)
Portfolio of Diversified Utility Stocks
Portfolio of Dow Jones Utility Average Stocks
Portfolio of Electric Utilities With Nuclear Power Plants