Dividends4Life: The Highest-Yielding Utilities

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The Highest-Yielding Utilities

Posted by D4L | Wednesday, July 20, 2011 | | 0 comments »

The power of dividend investing is pretty well-known these days. Higher-yielding stocks tend to offer higher returns over time than low- or no-yield stocks do, according to research from Jeremy Siegel and others. In fact, the 20 best-performing survivor stocks from the original S&P 500 in 1957 are all dividend payers. What's more, reinvesting dividends acts as a "bear-market protector and return accelerator," according to Siegel. The extra shares purchased and accumulated at higher dividend yields during down periods act as a protector in falling markets, and these extra shares turn into a "return accelerator" when prices rise.

I constructed a screen to find some promising high-yield, low-risk utilities for further research. I made sure the stocks met the following criteria: a. Market cap > $1 billion, b. Payout ratio < 60%, c. Three-year dividend growth > 0% and d. Utilities sector, as defined by Capital IQ. Here are some of the highest yielders the screen produced: 1. PPL (PPL) 5.0%, 2. Entergy (ETR) 4.9%, 3. Exelon (EXC) 4.9%, 4. Avista (AVA) 4.3% and 5. Xcel Energy (XEL) 4.2%.

Source: Motley Fool

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