Utility stocks can be a low-risk way to make income from dividends. These companies have a solid base and strong operational capabilities. Utility demand will not slow down. However, before you invest in these stocks, make sure to do your research thoroughly and select the right company.
Dominion Energy
If you are looking for a high-yielding utility stock that provides a steady income, then consider Dominion Energy. The stock has seen a nearly 12% increase over the previous year, with a 3.3% dividend rate. This yield is lower that the average utility sector yield (3.75%). This company is reliable, and the dividend is likely to grow over the long run.
Dominion Energy anticipates a 14% rise in revenue over the current fiscal. Moreover, the company has a $37 billion capital expenditure plan that is expected to drive annual earnings growth of 6.5% through 2026. Most of the money will be used for developing solar and wind farms. This will allow the company's operations to be adapted to climate change mitigation and other trends.
Exelon Corporation
Paul Fremont, Mizuho analyst has recently upgraded his price target on Exelon Corporation's stock to $46 instead of $32. He believes the stock will grow at a faster pace than the rest in the industry. He also forecasts a 13.4% FFO/debt ratio by 2024. The company is well-positioned for 2022, despite a very light regulatory calendar.
The company's huge size and geographic diversification offer investors ample opportunity to grow in an uncertain energy market. The company plans to spin-off its acquired businesses and has a long track record of growing dividends. This strategy should allow it to grow significantly in 2022 and beyond. UGI Corporation, which supplies electricity, natural gas and propane to businesses, is another popular utility stock. It has a strong dividend payout of 3.1% and a valuation in excess of $8.8billion. Otter Tail Corporation is another utility stock poised for growth. This utility stock has exposure to PVC pipe and electricity distribution. It also has a business in parts stamping and manufacturing.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners is a global infrastructure firm that owns and operate assets in the data, energy, transport and midstream sectors. The company owns and manages 61,000 kms electricity transmission lines, 4,200km of natural gas pipes, and 7.3 Million connections to electricity or gas networks. It also has interests in data centers, water heaters, and rail operations.
Investors will be able to benefit from Brookfield Infrastructure Partners’ continued growth. This company has a long history of making sound investments. It is also comfortable with its dividend payments. It still reaps the benefits from previous infrastructure investment.
American States Water
American States Water is a great utility company to invest in. It has a long history of increasing dividends. The company has raised its dividend for the last 68 years. This makes it one the most reliable dividend stocks. The company's management projects a dividend increase of 7-10% per annum through 2026. Its cash flow has also been very steady, which makes it an excellent dividend stock. Because the demand for water utilities is more stable than that for gas, they are typically more conservative investments than those of gas utilities.
American States Water provides clean water and electricity to Southern California and has long-term contracts with the U.S. government, including 11 military bases. This diversification of business models provides the company with both recurring revenues and growth opportunities. This diversification is essential for long-term development.