Stock dividend information shows utility picks over the last year or so as a way to insulate their IRA portfolios and brokerage accounts from volatility. After all, a dividend stock with a 6% yield is treating you much better than a CD even if the company plateaus all year.
However, investors have to beware when buying high yield dividend stocks like utility companies. The myth is that the utility sector is fertile ground for income investors because of reliable revenue streams and legalized monopolies – in reality, some of these companies are mismanaged, losing market share and downright bad investments.
So to keep your dividend investments safe, I offer up seven utility stocks to sell now:
Exelon Corp. (EXC)
It has been a tough 12 months for utility service holding company Exelon Corp. (NYSE: EXC) and it starts off my list of the top utility stocks to sell now. Over the past 52-weeks, this stock has fallen -11%, compared to gains of +12% and +11% for the S&P 500 and the Dow Jones, respectively. That erases any benefits of a 5% dividend yield. Additionally, EXC missed earnings estimates last quarter, prompting experts to forecast EPS of just 92 cents this quarter after the company posted an actual EPS of $1.11 last quarter.
- Related Article: 10 Best Stocks for 2011
National Grid (NGG)
Headquartered in London, National Grid (NYSE: NGG) is an international electric and gas company serving over 11 million homes. Since last January, this utility giant has slipped -16%, compared to gains by the broader markets. More recently, the stock has dropped -4% since Nov. 1. Despite the fact that National Grid serves so many customer globally, its stock is still worth selling since it is moving in the wrong direction. Don’t let the 6$% dividend yield suck you in.
NextEra Energy Inc. (NEE)
NextEra Energy Inc. (NYSE: NEE) is a provider of renewable energy in the U.S., known formerly as FPL Group Inc. This utility company produces its energy through wind and sun. While NEE may produce green energy, it’s green that the company stockholders have been losing. Since late October, NEE stock has lost -5.7%, while the broader markets have rallied strongly. It should be noted that analysts have drastically cut their earnings estimates for NEE to $0.90 this quarter, after the utility company posted an actual EPS of $1.45 last quarter.
- Read more of Louis Navellier’s investing articles on InvestorPlace.com
American Electric Power Co. Inc. (AEP)
Utility holding company American Electric Power Co. Inc. (NYSE: AEP) is another big-name utility stock that has faltered lately, and is clearly not one of the best stock picks. Since the start of November, AEP stock is down -4% amid a big rally on Wall street. Like other stocks on this list, experts are predicting a down quarter for AEP’s earnings – 42 cents a share when just 90 days ago the average forecast was for 50 cents a share. Not a good sign, even if AEP is near a 52 week high and offers a 5% dividend yield.
Public Service Enterprise Group Inc. (PEG)
Public Service Enterprise Group Inc. (NYSE: PEG) is another utility holding company that makes the list of top utility stocks to sell despite a healthy 4.3% yield. Over the past 52-weeks, the stock has dropped -7%, compared to modest gains by the broader markets. More recently, the stock has fallen -3% since the beginning of November. Finally, the company is projected to post a year-over-year earnings decline in the current quarter – with an -11% expected for next quarter. Not the kind of fundamentals investors should be looking for.
As of this writing, Louis Navellier did not own a position in any of the stocks named here.
