When I say “boring” stocks, that might seem like I’m talking about stocks that aren’t worth your attention.
Quite the opposite. I’m talking about bulletproof stocks for a tricky market.
The market certainly has been on a roller coaster ride recently. We’ve had a couple yield curve inversions, the Dow Industrials lost 800 points in one day, and the trade war with China continues unabated.
Europe is headed into recession, negative interest rates reign, and Brexit looks like it’s going to be messy.
Wouldn’t it be nice in all this turmoil to have some stocks that will chug right along, growing their stock price and delivering solid dividend yields, most of which outpace inflation?
That’s what I call boring stocks. They aren’t unicorns or in sexy, headline-grabbing industries. But they do make money slowly and steadily. And they are all investor-friendly. It’s a phenomenon I often refer to as the Money Magnets.
To get you started, these seven boring stocks with exciting prospects below are the perfect antidote to the prevailing winds tossing this market around.
American States Water (NYSE:AWR) is an interesting utility because it reaches across a couple lines of business. It’s a company that manages water resources for over 80 communities in California, particularly around Los Angeles.
But it also has divisions that provide electricity and contracted services to over a million customers in nine states.
Water is becoming an increasingly important resource. And water utilities are becoming key assets to manage these resources. As we have seen in Michigan and Georgia, as well as many other states, old infrastructure is endangering the lives of citizens.
In agricultural states like California, wise management of resources for business and the citizenry is becoming ever more complex.
AWR stock has had a run in the past year, up 46% in the past 12 months and 33% year to date. Given that move, its dividend has diminished, but it still delivers at almost 1.4%, which may not beat current CD rates, but they don’t offer the growth potential of AWR stock, either.
York Water (NYSE:YORW) is the oldest investor-owned utility in the country. It started in 1816, when a group of local businessmen in York County, Pennsylvania got together and issued shares in a company that could mange water resources for the growing city of York.
As the city grew, it needed a reliable source of water for the community, as well as water at the ready for any structure fires. Bucket brigades weren’t going to be able to serve the growing city.
In recent years, YORW has gone into the wastewater business as well. This is just managing the flow on a different set of pipes and adds value to the overall business.
But YORW has stuck to its knitting. It has grown with the needs of the two counties it serves, but it isn’t looking to take on risky expansion. Its sub-$500 million market cap means you’re getting a small, focused utility with great relations with the utility regulators and a well-established infrastructure.
The stock is up 25% in the past 12 months, 17% year to date and delivers a trusty 1.9% dividend to boot. And I’ve got more where that came from.
ONE Gas (NYSE:OGS) is a natural gas utility that operates in Texas, Oklahoma, and Kansas. It provides gas for commercial and residential customers.
The nice thing about this company is that it’s focused. There are plenty of big utilities that have natural gas as well as renewables along with their electric generation and distribution mix.
OGS just does natural gas. And that’s a good thing, especially if you already have a bigger utility or two in your portfolio. Its two million customers make it one of the largest natural gas utilities in the U.S.
Natural gas is one of the great energy resources in the U.S. While coal is still around, much of its production is getting shipped overseas because it’s not as efficient as natural gas.
Fracking operations in Texas and Oklahoma as well as many other places in the U.S. have unearthed significant natural gas assets. This spells growth for years to come.
Most of OGS stock’s gains came in 2019 – it has return 16% year to date and 14% in the past year. It delivers a solid 2.2% dividend yield that’s outpacing inflation.
Chesapeake Utilities (NYSE:CPK) can recall its roots back in 1859 as the Dover Gas Light Company. Remember, gas lights were all the rage in the late 19th century and early 20th century until reliable electricity would supplant them.
CPK is from Delaware, the home of the powerful DuPont family, which means it had not only a consumer base but also a significant industrial base.
CPK operates on the Delmarva peninsula, some of the most popular beach traffic on the East Coast, as well as in Florida, as Florida Public Utilities.
Its operation has also expanded beyond natural gas and now encompasses propane, electricity, and even steam. It also has regulated and unregulated business divisions.
The regulated business helps keep business steady and reliable and the unregulated side takes advantage of opportunities that pop up in the market to make bigger gains.
With a market cap of $1.5 billion, it’s not a big company, but it is rock-solid. It’s up 19% year to date and delivers a 1.7% dividend. Nothing fancy, just a solid utility with a steady customer base in growing areas. It’s a situation that’s producing some of my favorite high-growth investments at Growth Investor.
NextEra Energy (NYSE:NEE) is the largest utility holding company by market cap.
That’s right, we’re going to talk about a big-cap utility that operates in one of the fastest-growing states in the U.S. and has a very strong market position in one of the hottest growth sectors in the utilities sector – renewable energy.
This hardly sounds like a boring stock, right?
Well, just remember all this is in the utility sector, so it’s all relative. But NEE stock is getting a lot of attention, even from people who don’t usually consider utilities.
It has two divisions: regulated and unregulated. Its regulated division is FPL, formerly known as Florida Power and Light. FPL delivers electricity to about 10 million customers across nearly half of Florida (mostly the southern and western half) and is the third-largest utility in the U.S.
Its unregulated division is the largest producer of wind and solar in the world. Other utilities looking for carbon futures make this a huge growth opportunity for NEE.
NEE stock is up 29% in the past 12 months and delivers a near 2.3% dividend. And none of this is subject to trade wars, GDP or a strong dollar. In fact, I’ve declared it one of my Top 5 Stocks for Growth Investor.
Duke Energy (NYSE:DUK) has 7.7 million customers across six states: Florida, North Carolina, South Carolina, Ohio, Tennessee and Indiana. It is a diversified monster that provides electricity generation and distribution as well as natural gas distribution services.
The company started in 1904 when it took over the Catawba Hydro Station in South Carolina to help industrialize the south. The goal was to power the Victoria Cotton Mills and look for a way to diversify the economy of the agrarian south.
Nowadays, DUK has continued to lead, but now is known for being one of the most proactive renewable energy utilities in the nation. This has been an effort of the company long before it was cool to look at renewables as a way to generate power for most big utilities.
DUK has nine subsidiaries that operate across its territories, including an array of unregulated operations that help power the regulated side of the business as well as trade with other utilities and power customers.
While DUK stock hasn’t been on fire – up 5% year to date and 12% in the past year – its dividend is generous (4.1%) and about as reliable as they come. That means you’ll get paid inflation beating returns come what may with the rest of the market.
TerraForm Power (NASDAQ:TERP) is certainly a 21st century energy company. Its single mandate is to operate, own, and acquire wind and solar assets in North America and Europe.
Right now, that means nearly 30 U.S. states and territories as well as Canada, Chile, Spain, Portugal, Uruguay and the UK.
It has more than 3,700 megawatts of capacity, that’s split 64/36 wind and solar. The revenue split on its generation platforms is 51% solar, 49% wind.
Bear in mind, this is all unregulated. TERP isn’t a utility in the traditional sense since it doesn’t have a regulated business. It sells it power to utilities and other power producers that want to add renewables to their energy mix.
It also means that utilities don’t have to buy or expand power generation operations, but they can simply power from TERP until the demand becomes significant enough to justify the larger expansion expense.
Buying renewable energy also helps manage utilities’ carbon credits. While the federal government has loosened its regulatory grip on clean energy, many states and other countries haven’t.
The company is just five years old, so it’s still a baby in this sector, but it’s growing fast. TERP stock is up 55% year to date as low interest rates mean it can continue to expand its operations and lower its operating costs. Its 4.8% dividend is also attractive, but bear in mind that it’s not as secure as a utility like Duke or Dominion Energy (NYSE:D).
Why High-Dividend Stocks Are So Firm Right Now
The “smart money” on Wall Street knows that dividends are crucial for their performance stats: The income ultimately smooths out a portfolio’s returns overall.
Speaking of “juicing” returns…
There’s another trick Wall Street money managers have up their sleeves. It’s called “window dressing.” When we approach the end of a quarter, big money will often buy top-performing stocks to spruce up their returns when they report the performance of their current portfolio.
The influx of cash gives those stocks even BETTER returns. That’s what we’re about to see as the third quarter closes at month-end.
And we can go along for the ride – as long as we get positioned by, say, September 16.
You won’t want to let the clock run out on this. After September 16, the next buying window won’t really open until next earnings season.
Click here for all 3 steps you should take right now and learn more about this phenomenon.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.