Dividends4Life: 5 Utility Stocks Paying A Dividend Of 5% Or Higher

Dividend Growth Stocks News

Reinvested dividends are a powerful growth generator. If you invested just $1,000 in Johnson & Johnson's (JNJ) stock in the beginning of 1980 and reinvested all dividends, you'd have over $91,000 today. That's an impressive return of over 9,000%. Investors who look for dividend paying stocks get growth as a tertiary benefit, though they're primarily looking for a defensive investment that can generate consistent returns over a long period of time. What's the go-to industry for dividend hunters? The utility sector.

Measuring the value of utility stock involves more than just looking at its dividend yield. Operating margins tell investors how flexible the company is to pricing changes - the higher margin, the better. Utilities though, are debt-laden companies, which makes them very sensitive to interest rate changes. A good way of analyzing a company's ability to finance debt is through the Weighted Average Cost of Capital [WACC]. This figure will tell you what kind of return the company needs to make on capital expenditures to make up for the borrowing cost. The following are 5 utility stocks with high dividends, operating margin, its associated debt load, and WACC: TECO Energy (TE), AmeriGas Partners LP (APU), Suburban Propane Partners LP (SPH), Niska Gas Storage Partners LLC (NKA) and Gas Natural Inc. (EGAS).

Source: Seeking Alpha

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