Utility Investing For Dividend Growth Investors: A Prospective Study

As a dividend growth investor I am aware of the importance of dividend income in achieving my retirement goals. In my desire to achieve this income I am naturally attracted to the higher yielding stocks such as utilities, MLPs and REITs. But I am often concerned about which particular stocks should I choose to put in my portfolio. By choosing only one or two stocks of any particular type, for example two utilities, if either of them cuts their dividend my dividend income could be significantly disrupted. But recently I came upon the idea of building my own personal ETF. By buying a basket of utilities, and considering them to be one single entity, a utility ETF, I could count on the income from the basket of stocks rather than any one particular one.

I already own many utilities, including, New Jersey Resources, Dominion Resources, Southern Company (NYSE:SO), and Wisconsin Energy Corp (NYSE:WEC), and I will most likely add more in the future. After doing this study I feel more secure that over time the group as whole should do well for me, and that by considering all of them as a group, rather than as individual stocks, a personal utility ETF can be an acceptable holding for a DGI portfolio.

Source: Seeking Alpha

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