7 Dividend Utility Stocks to Buy to Charge Up Your Income

dividend utility stocks - 7 Dividend Utility Stocks to Buy to Charge Up Your Income

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  • CenterPoint Energy (NYSE:CNP) – Crude oil is a key raw material for the company, and its prices are on the rise. This is good news for the company because they’ve had a few recent setbacks.
  • NextEra Energy (NYSE:NEE) – NextEra, one of the largest utility companies in North America, has made significant progress this year.
  • DTE Energy (NYSE:DTE) – DTE has been consistently growing in recent years, which means dividends are highly safe and have a high margin.
  • WEC Energy Group (NYSE:WEC) – In 2035, WEC is planning to eliminate the use of coal in its energy mix and focus on the growing renewables space.
  • Edison International (NYSE:EIX) – The company is fully committed to becoming carbon-neutral and is working with local and state authorities to reach this goal.
  • Entergy Corporation (NYSE:ETR) – This company serves customers in four different states. More recently, they have been putting more concentration on the solar energy industry presence and development in their business than on coal power for now.
  • Duke Energy Corp (NYSE:DUK) – Duke Energy has announced a capital spending program that includes new projects and larger amounts of maintenance. The bulk of the plan will be dedicated to zero-carbon generation and grid modernization.

Dividend utility stocks might seem bad for your portfolio during high inflation and rising interest rates. However, the sector has done well since the start of the year.

The Utilities Select Sector SPDR Fund (NYSEARCA:XLU) is up 6% in the year thus far. There are a lot of companies in the utility industry that offer great operating models and excellent payouts.

The benefits of investing in dividend utility stocks include:

  • A consistent stream of income
  • Low volatility
  • High liquidity

Here are seven companies in the utility space offering excellent dividends and strong operating models to cover them.

CNP CenterPoint Energy, Inc. $32.23
NEE NextEra Energy, Inc. $84.58
DTE DTE Energy Company $136.86
WEC WEC Energy Group, Inc. $103.66
EIX Edison International $70.80
ETR Entergy Corporation $121.79
DUK Duke Energy Corporation $114.23

Dividend Utility Stocks: CenterPoint Energy (CNP)

Centerpoint Energy Southern Indiana headquarters.
Source: Kurt D. Eichmiller / Shutterstock.com

Dividend yield: 2.1%

CenterPoint Energy provides natural gas and electricity services for all residential, commercial, and industrial customers in the United States.

The last few years have been troubling for the company. First, it had trouble integrating Vectren Corp., a utility company focusing on customers and businesses in Indiana and Ohio. Then the pandemic hit, and the company’s unit, Enable Midstream Partners, was underperforming. However, with the price of crude oil rising once again, things are looking good for the company.

CenterPoint is based in Houston, a metropolitan area that leads the nation in economic growth. It also has some of the most accessible and cheapest natural gas reserves, making it an ideal target for expansion.

The construction of new pipelines will help the gas industry increase its reach in this region and provide growth opportunities for businesses. This infrastructure is also required to support residential and commercial customer growth – providing a long-term business opportunity.

Natural gas, which has been very important in recent years and has been relevant as an industrial fuel provider, is expected to see even more growth in the near and medium-term. On top of this, the company’s midstream investment could help it strengthen its presence throughout North America and worldwide.

NextEra Energy (NEE)

Nextra Energy (NEE) website on a mobile phone screen
Source: madamF / Shutterstock.com

Dividend yield: 1.9%

NextEra Energy is the largest independent power producer in Florida and one of the largest in the United States. It has been growing much faster than the average utility company over the past decade, powered by its investments in renewable energy.

Its ability to produce clean energy keeps it at the forefront of the field and has allowed it to become one of the most recognized players in the industry. NextEra has been providing clean energy for more than 30 years and is the world’s largest wind and solar energy producer.

NextEra Energy primarily makes use of solar, wind, geothermal, and hydroelectric power for its electricity. It has also been a major player in developing emerging renewable energy sources such as biomass and hydrogen fuel cells.

On the financial side, NextEra, which was known for its consistent double-digit earnings growth, delivered yet again in 2021. It is one of the largest utility companies in North America, with $3.57 billion in net income this year. It has been ranked as one of the best performing utilities by Standard & Poor’s.

NextEra Energy has a better-than-average return on investment and very strong growth. The company’s investments in renewable energy are helping the company support a growing population. Buying shares of this utility stock should result in continuous long-term financial returns.

DTE Energy (DTE)

 Front entrance of DTE Energy in Michigan.
Source: ehrlif / Shutterstock.com

Dividend yield: 2.6%

DTE Energy is a nationwide energy company rooted in Detroit. It provides electricity to 2.2 million customers of southeast Michigan and delivers gas to 1.3 million customers. It’s also active in trading energy, and specializes in bringing business needs to the table when building solutions for clients across the U.S.

The company has seen stable growth in the past three years. As a result, if you are looking for a steady performer for your portfolio, DTE fits the bill.

In 2020, DTE raised its quarterly dividend to $1.085 per share, its 11th consecutive dividend hike. However, in 2021, the company had to slash its dividend by 24% because of the separation of its midstream business. However, now the company can prioritize giving a healthy dividend to its shareholders.

Ultimately, utility companies are considered a safe, low-risk investment for retirement portfolios because they are recession-resistant. These companies distribute a lot of their earnings to shareholders because they are not subject to volatile or unsteady cash flows. Therefore, while DTE might look unattractive to someone looking for hyper-growth, it is still one of the safest stocks for your investment needs.

Dividend Utility Stocks: WEC Energy Group (WEC)

WEC Energy Group logo seen displayed on a smartphone
Source: rafapress / Shutterstock.com

Dividend yield: 2.8%

WEC is a Wisconsin-based energy company that provides electricity, natural gas, heating, and cooling solutions to more than 4.6 million customers.

In 2020, almost 36% of the electricity generated for the company came from coal. In 2035, the plan is to eliminate the use of coal in its energy mix. This will allow for more strategic decisions and less energy waste. The company is looking to spend an additional $1.3 billion on renewables under its latest five-year capital plan to complete this goal.

WEC Energy has been paying dividends for three decades now and shows no slowing down. They’ve paid out their dividend every year since 1988, making them one of the industry’s most popular companies to invest in. It has the policy to increase dividends by 6% to 7%, subject to board approval.

WEC has raised dividends consistently over the past 10 years with no signs of slowing down. Investors should look forward to similar growth in the future. The recently announced dividend of $2.91 per share is a 7.4% increase from last year’s dividend, continuing this trend and providing valuable income for shareholders.

Edison International (EIX)

Southern California Edison sign and logo EIX stock
Source: Ken Wolter / Shutterstock.com

Dividend yield: 3.9%

Much like other companies in the utility space, Edison International is looking to increase its exposure to the renewables space. At the moment, the company’s primary market in Southern California. However, it is also active in other markets.

Much like several other energy companies at the moment, the company is emphasizing the shift to sustainable energy. Now that the company is fully committed to becoming carbon-neutral, it has a detailed plan to reach that goal.

Consequently, Edison International has been trying to meet its long-term decarbonization goals. It plans on building 38,000 EV chargers in southern California and has completed about 200 miles of EV charging infrastructure.

Piloting these projects has been more expensive than a benefit, but the long-term promise could mean higher returns, leading to reliable dividend growth.

This is a long-term investment, but you are looking at an excellent company. EIX has been profitable for decades, and the dividend payout has been steady throughout. The price of dividends will vary with market conditions and other factors, but you should be able to count on the business staying profitable through the near future.

Most recently, Edison International declared a dividend of 70 cents per share, which will increase the annual dividend by 15 cents per share, with plans to continue this increase through 2022.

Entergy Corp. (ETR)

Entergy sign at their headquarters in New Orleans
Source: JHVEPhoto / Shutterstock.com

Dividend yield: 3.3%

Entergy serves 2.9 million customers across four states in the south. It is exceedingly pivoting towards solar energy from coal power. If utility companies invest in clean energy, customers should be willing to increase their rates for future investments.

Entergy has faced several major barriers which impact its financials over the last year. First, there was the global pandemic. Second, there was the global recession. Third, there were multiple record-breaking hurricanes, and fourth, we had rising gas prices during and after this winter storm season. Entergy cut the costs of operating and maintaining facilities to maintain profitability.

The company maintained a high payout despite all of these issues. Quarterly payments have increased in the last two years and reached $1.5 billion in total. And with the company increasingly pivoting towards renewables, we can expect these excellent payouts to continue.

Dividend Utility Stocks: Duke Energy (DUK)

The logo for Duke Energy (DUK) is seen on a sign at one of the company's offices.
Source: Jonathan Weiss / Shutterstock.com

Dividend yield: 3.4%

Duke Energy is among the biggest electricity providers in America, with a market value of nearly $89 billion. The company owns or operates 50,000 megawatts of generating capacity and serves 8.2 million customers.

Plus, the company has been investing heavily in the utility sector and is hoping to garner lots of investment opportunities that will help it stay afloat during economically challenging times.

Duke Energy has announced a $63 billion spending program that includes new projects and increased maintenance across natural gas, coal, and nuclear energy. However, the bulk of the plan will do towards renewable power generation sectors. That kind of future-oriented thinking will help maintain the company’s high dividend yield.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


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