If you’re an income investor in search of strong, stable dividend yields, there’s a lot to love about electric utilities. And sector stalwarts such as Consolidated Edison (NYSE:ED), Exelon (NYSE:EXC), CenterPoint Energy (NYSE:CNP), Progress Energy (NYSE:PGN) and Duke Energy (NYSE:DUK) are offering a sort of gift-with-purchase deal right now — ex-dividend dates during Valentine’s Week.
Ex-dividend dates are important for investors because they determine whether you or the stock’s seller receives the most recently declared dividend. Let’s say a stock has an ex-dividend date of Valentine’s Day. If you buy that stock and settle on Feb. 14 or later, you don’t receive the declared dividend — the seller does. But if you buy that stock on Feb. 13, the declared dividend is paid to you.
When purchasing stocks in a high-growth sector, the dividend is almost an afterthought.(After all, when brokers talk about five-year EPS growth projections of 20% to 25%, the dividend, if any, could be shaky.) But utility stocks have found a place in income investors’ portfolios because of their stability, sustainability, and high dividend yields.
These stocks are not flashy — in fact, the yields of many electric utilities are downright frumpy compared to the vaunted returns heralded by the hottest emerging-market and tech stocks. And don’t forget, while utility stocks went wild in a still-sluggish economy last year, 2112’s early optimism has sent investors fleeing the sector in droves in search of more action and bigger returns.
But the electric utility niche has its own action — particularly in the area of mergers and acquisitions. While 2012 likely will not usher in a new wave of tie-ups among regional giants such as last year’s engagement announcement between Exelon and Constellation Energy (NYSE:CEG), acquisition opportunities remain, particularly among smaller providers such as Wisconsin Energy (NYSE:WEC) or NV Energy (NYSE:NVE).
Here are five high-yield electric utility stocks that provide a nice little gift with purchase during Valentine’s Week:
Con Ed wholesales electric power and provides electric service to New York and parts of Pennsylvania and New Jersey. The company’s ex-dividend date is Feb. 13 and the pay date is March 15. The 60-cent dividend amounts to a current yield of 4.1%. With a market cap of $17.3 billion, ED is trading around $60, 21% above its 52-week low last August.
Exelon distributes electricity in Illinois and Pennsylvania and operates nuclear power plants in several states, including Pennsylvania and New Jersey. The company’s ex-dividend date is Feb. 13, and its pay date is March 13. The 53-cent dividend amounts to a current yield of 5.3%. With a market cap of $26.6 billion, EXC is trading at around $40, 12% below its 52-week high last November.
Houston-based CenterPoint wholesales transmission and distribution services to retail electric providers, municipalities, electric cooperatives, and other distribution companies and serves approximately 2.1 million metered customers. Its ex-dividend date is Feb. 14, and its pay date is March 9. The 20-cent dividend amounts to a current yield of 4.3%. With a market cap of $8 billion, the stock is trading at around $19 — 24% above its 52-week low last April.
Progress Energy generates, transmits, distributes and sells electricity in North Carolina, South Carolina and Florida. It also operates nuclear plants and engages in alternative-energy projects. Its ex-dividend date is Feb. 15, and its pay date is March 16. The 62-cent dividend amounts to a current yield of 4.5%. With a market cap of $16 billion, the stock is trading at around $54.50 — 30% above its 52-week low last August.
Duke manages a portfolio of natural gas and electric supply, delivery and trading businesses in the U.S. and Latin America. Its ex-dividend date is Feb. 15, and its pay date is March 16. The 25-cent dividend amounts to a current yield of 4.7%. With a market cap of $28.4 billion, the stock is trading at around $21.50 — 27% above its 52-week low last August.
As of this writing, Susan J. Aluise did not hold a position in any of the stocks named here.