Best Electric Utility Stock Paying a Dividend in 2017, SO

You want the best electric utility stock paying a dividend in 2017 for your stock account.  Great.  We love dividends, and electric utility stocks have a great moat to protect their businesses to keep paying dividends.  There is a lot of utility companies paying a dividend, but we want the best one to add to our stock account.  Let’s get to it.

Best Electric Utility Stock Paying a Dividend in 2017
Best Electric Utility Stock Paying a Dividend in 2017

Are Utility Stocks Good for a Dividend Portfolio?

Electric utility stocks have great moats.  You cannot ship a power plant overseas.  Most of them have local monopolies that reduce and/or eliminate competition for them.  In the future, I see a trend in increasing electricity usage.  With the increasing need for data centers, future electric vehicles, and all of the progress being made in different electronic devices, we will need a lot more electricity.

There are a lot of electric utility stocks out there.  First, we need to reduce some of our choices.

Are you Paying a Dividend?

Our first easy step is to eliminate all of the utility stocks not paying a dividend.  Even after this step, there is still a lot of electric companies out there.  We will need to reduce the list even more.


Great Electric Utility Companies

Next, we will need to reduce our choices to the possible best of breed electric utility stocks.  We will use the following options to narrow our choices.

  • Dividend Aristocrats and 100-year dividend payers: We want companies that have a great dividend track record. Either 25 years of consistent dividend growth or companies that have paid a dividend for 100 years plus.
    • This will add Consolidated Edison (ED) and Edison International (EIX).
  • Then we looked at the biggest Electric utilities by Market Cap: You do not become the biggest by not being good at what you do. The size of the utility companies gives them strength and other advantages.
    • DUK Energy (DUK), NextEra Energy (NEE), and Southern Company (SO).
Stock Symbol Market Cap (B) Year Steak
Consolidated Edison ED 23.5 42
Duke Energy DUK 57.3 12
Edison International EIX 25.9 14
NextEra Energy, Inc. NEE 61.1 22
Southern Company SO 50.0 16

Best Electric Utility Stocks

Now we have our top 5 utility stocks.  We need to narrow it down to our top #1 best of breed favorite.  These companies have a proven track record of making money, paying dividends, and being the best for dividends.  They all have lower future PE ratios than trailing ratios, which shows they expect to make more money in the future.  They all have positive dividend growth rates.  So, let start eliminating some of these stocks.

Dividend Yield

Out of the top 5, DUK Energy (DUK), Consolidated Edison (ED), and Southern Company (SO) have the highest yields.  So, we will eliminate the other 2 choices.  Only 2 more choice to eliminate.

Stock Symbol Dividend Yield
Southern Company SO 4.5%
Duke Energy DUK 4.2%
Consolidated Edison ED 3.6%
NextEra Energy, Inc. NEE 3.0%
Edison International EIX 2.7%

Recent Dividend Growth Rate Track Record

Not too bad, we are down to our best 3 dividend utility stocks.  Our next qualifier is that we want our dividends to grow.  We want more money every year, without any extra work.  We will compare the 5 year DGR (dividend growth rate).

Stock Symbol 5 Year DGR
Southern Company SO 3.5%
Duke Energy DUK 2.5%
Consolidated Edison ED 2.2%

Southern Company (SO) has a 5 year DGR that is about 50% better than Duke Energy (DUK) and Consolidated Edison (ED).

Best Electric Utility Stock Paying a Dividend

We have a winner.  Southern Company (SO) is our best electric utility stock paying a dividend in 2017.

Who is Southern Company (SO)

Now we picked our best stock, but who are they?  Southern Company (SO) is in Atlanta, Georgia and was founded in 1945.  They can generate about 44,000 megawatts of capacity, providing 9 million customers with energy.  They make electricity by using fossil fuels, solar power, wind, hydroelectric, and a few others sources.

http://www.southerncompany.com/about-us.html, 2017

Electric Utility Stock Purchase

On 3/7/17, we purchased 10 shares of Southern Company (SO) for $508.85 including those electrically charged commissions.  This will add $22.40 per year to our dividend stock account.  A few more purchases, and I can pay for 1 month of electricity.

 

What is your best electric utility stock paying a dividend in 2017?  Do you like my pick of Southern Company (SO)? Should I have picked the Dividend Aristocrat?  Please feel free to add your thoughts below in the comment section.

Read More Dividend Stock Trades

Disclosure:

  • SO – We own shares.
  • DUK, ED, EIX, NEE – We do not own shares.

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12 thoughts on “Best Electric Utility Stock Paying a Dividend in 2017, SO

  1. I have liked SO for many, many years and have owned it since 2007. I recently added to my SO last month along with D. There are a few really solid utilities out there. Thanks for sharing your take on SO.

    1. Thank you. I think higher interest rates will decrease the stock price on the short term. However, in the long term, great companies will generally continue to be great and raise their dividends. I will use the potential weakness to buy more.

  2. Nice buy. I don’t currently own any of them but I am looking to increase the percentage of my portfolio in that sector. I’ll have to keep my eye on them. Thanks for sharing.

  3. Hi DividendMonkey –

    I regularly review all 15 Dow Jones Utility stocks on my web site
    I agree that $SO is a solid dividend paying utility stock.
    As of now, $SO has the highest dividend yield with the lowest PE Ratio.
    Also, the price is around 50 per share which is the middle of the range for the past year.
    It could be a good time to invest in this one.
    Alternatively, $XLU is a Sector SPDR ETF with a dividend of 3.25%.
    $SO is one of the top 10 holdings.

    1. Hello Symbol Surfing,

      So far, SO has been good for us. We like the PE ratio and dividend yield. I am glad your analysis agrees with us to invest in SO.
      Happy dividend investing, DividendMonkey.

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