Dividend.com has added a super-regional utility company to the Best Dividend Stocks List and removed a smaller utility firm from the list.
There’s something to be said about scale when it comes to operating a utility company. It stands to reason, the more customers you have, the greater the margins you will have on your generating and transmission assets. Luckily for our new pick, it has customers in spades. One of the largest utilities in the world, our firm features millions of customers in the fast-growing Sun Belt region in the U.S., as well as tens of thousands of megawatts worth of generating assets.
And, increasingly, those megawatts are being produced via renewable energy and cogeneration assets.
Our pick has embraced solar, wind and natural gas in a big way. As one of the largest operators of these generation assets in the nation, our pick has managed to realize some of the lowest operating costs and highest margins in the entire sector. This has led to continued cash flow growth as well as rising dividends for several years.
But the firm also has other tricks up its sleeve, including placing some of its value assets into a tax-advantaged master limited partnership (MLP) for even more tax savings.
With a focus on the future while delivering significant results in the present, our pick deserves to be on our coveted Best Dividend Stocks List and represents a great buy for income seekers.
To summarize, here are five reasons why you should own this stock:
- Low forward P/E of 19, making it one of the cheapest firms in the utility sector.
- Has grown its dividend by a compound annual growth rate (CAGR) of 8.8% since 2005.
- Increasingly focused on renewable energy with more than 2,500 MW worth of backlog added in 2017 alone.
- Features a national operating area with regulated utility assets in the fast-growing Sun Belt region as well as renewable generation assets all over the country.
- Payout ratio of 57%, among the lowest in the sector, and steadily growing yield of 2.65%.
Soft Removal of a Regional Utility from the Best Dividend Stocks List
We added this utility stock to the Best Dividend Stocks List in the middle of this past summer. However, to make room for our larger super-regional pick, we are performing a soft removal of it from the list. The utility continues to feature plenty of positives and an overall high DARS score. However, thanks to our rules-based model, we have been forced to remove it due to a tie-breaker trigger for the Best Dividend Stock List. With that, the regional utility has been removed from the list but remains an excellent pick for income seekers.
Find out which ‘tech hero’ made it to our Best Dividend Stocks List last week here.
