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.
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.
- 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.
|Stock||Symbol||Market Cap (B)||Year Steak|
|NextEra Energy, Inc.||NEE||61.1||22|
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.
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.
|NextEra Energy, Inc.||NEE||3.0%|
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) 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.
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.
- SO – We own shares.
- DUK, ED, EIX, NEE – We do not own shares.