When Warren Buffett speaks, we should all listen. But when the Oracle of Omaha pulls out his wallet, we should really take notice. After building his cash pile for what seems like months, Buffett finally made a buy. And it was utility assets. That shrewd purchase is actually very telling in that Buffett thinks utilities have what it takes to generate real cash flows during the current environment.
This is all great news for our Best Dividend Stocks List pick in the sector. Buffett’s buy of utility assets has recently lit a fire under shares. And there’s a good reason why. Our pick has long been able to generate significant cash flows and pay investors plenty of dividends. Thanks to its near monopoly status in a top region of the country, our pick fits the asset profile Buffett was looking for.
Even better is that our pick may have more potential up its sleeve.
Our utility pick has long been a top producer of renewable energy. Through its network of hydroelectric and wind assets, our pick has been able to score plenty of rate increases, tax breaks, and other benefits from regulators. And as our pick continues to expand into smart grids and other high-tech moves, its cash flows have continued to surge. Add lower natural gas prices for its other operations and you have a recipe for long-term growth.
It’s no wonder management has been comfortable in raising its target payout and pledged to raise its dividend on a consistent yearly basis. For investors, it’s proof that they should follow Buffett’s lead and take a serious look at utility stocks like our pick.
To summarize, here are five reasons why you should own this stock:
- It operates a monopoly in a fast-growing region of the country full of manufacturing and tech firms.
- It paid a dividend every quarter since 1943 and continues to increase that payout – the last jump was 6%+ last November.
- It’s a big winner from the shift toward renewables and the smart grid with new investments in modernization.
- Predictable rate hikes allow for predictable EPS growth and, in turn, dividend growth.
- It has a healthy payout ratio of 59% and yield of 2.91%.
Our Best Dividend Stocks List has 20 of the highest-rated stocks by our proprietary Dividend.com Rating system. Go Premium to find out the entire list.
