{"id":62070,"date":"2023-09-17T09:08:27","date_gmt":"2023-09-17T13:08:27","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/6-utility-stocks-yielding-up-to-8-9\/"},"modified":"2023-09-17T09:08:31","modified_gmt":"2023-09-17T13:08:31","slug":"6-utility-stocks-yielding-up-to-8-9","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=62070","title":{"rendered":"6 Utility Stocks Yielding Up To 8.9%"},"content":{"rendered":"
\n

Utility stocks are the OG dividend payers. They\u2019re delightfully dull. They\u2019re dependable. They\u2019re always worth scouting for income\u2014and I\u2019ve got six 5%-plus dividends on deck to share with you today.<\/p>\n

I\u2019m pleasantly surprised that we still<\/em> have a chance to buy utilities for reasonable prices right now. Despite a year\u2019s worth of worries about a pending recession, utilities have been the market\u2019s worst sector year-to-date.<\/p>\n

Perfect<\/em>. We have value!<\/p>\n

Utilities have worked off the froth I pointed out a year ago. Let\u2019s just look at the forward P\/Es from this year and last.<\/p>\n

<\/fbs-ad><\/p>\n

Sept. 10, 2022: Utilities Forward P\/E:<\/strong> 20.9 S&P 500 Forward P\/E:<\/strong> 17.7<\/p>\n

Sept. 10, 2023: Utilities Forward P\/E:<\/strong> 16.1 S&P 500 Forward P\/E:<\/strong> 19.1<\/p>\n

Not quite \u201ccheap,\u201d but it\u2019s a much better entry point than we\u2019ve been afforded for quite some time.<\/p>\n

The timing couldn\u2019t be better. I think utilities will be the \u201cit\u201d investment come 2024. Any experts not predicting an outright recession are at least expecting an economic slowdown\u2014that will slow interest rates and, eventually, even tug rates lower.<\/p>\n

That\u2019s bad news for high-priced tech and communication stocks that have gone berserk in 2023. But it\u2019s good news for \u201cbond proxies\u201d like utility stocks that never really go out of style for next-level investors with their eye on the retirement prize.<\/p>\n

I\u2019ve recently talked about another opportunity in the sector\u2014\u201cgrowth utilities\u201d\u2014but today, I want to focus on yield. Let\u2019s look at six utilities, paying between 5% and 9%, that we might consider stocking up on.<\/p>\n

NorthWestern Corporation (NWE, 5.0% yield)<\/strong> is an example of how the utility sector is transforming\u2014that is, it\u2019s moving toward clean energy.<\/p>\n

NorthWestern provides electricity and natural gas to customers in South Dakota, Montana and Nebraska. It boasts that 45% of the electricity it generates for South Dakota comes from wind projects, and 58% of Montana\u2019s electric generation comes from carbon-free sources.<\/p>\n

NWE shares have fallen off a cliff of late, along with the rest of the utility sector, amid wildfire concerns (among other headwinds). That at least helps the buy case\u2014while Northwestern
\n NWE
\n <\/fbs-ticker> is a delightfully low-volatility stock, it\u2019s also pretty pricey. I examined it back in March when it was trading at a price\/growth-to-earnings (PEG) ratio of 4, though even after recent losses, it\u2019s still trading at a lofty 3. (Anything above 1 is considered overpriced.)<\/p>\n

UGI
\n
\n UGI
\n <\/fbs-ticker> Corporation (UGI, 6.3% yield)<\/strong> distributes natural gas to roughly 890,000 customers in Pennsylvania, West Virginia, and Maryland, as well as electricity to roughly 63,000 customers in Pennsylvania. But it also has a variety of other businesses, including retail energy marketing, electricity generation, HVAC, and even AmeriGas\u2014America\u2019s largest retail propane distribution operation, which UGI acquired outright in 2019.<\/p>\n

It\u2019s a Mid-Cap Dividend Aristocrat that has raised its payout for 36 consecutive years, and paid dividends for nearly 140 years without blinking.<\/p>\n

UGI has been a gross underperformer in recent years and has lost roughly half its value since 2019, in part thanks to outsized exposure to Europe, where the war in Ukraine sent energy prices skyward, and in part to delivery issues with AmeriGas.<\/p>\n

The upshot? Its 6%-plus dividend is well-covered, UGI has a stellar payment track record, and it\u2019s cheap\u2014shares trade at a lean 7 times earnings estimates and 50% of revenues.<\/p>\n

Back in June, I talked about a note from one of my readers asking me why I prefer clean-energy payer NextEra Energy Partners
\n
\n NEP
\n <\/fbs-ticker> (NEP, 7.0% yield) <\/strong>to solar-and-wind name Clearway Energy (CWEN, 6.7% yield)<\/strong>. After all, CWEN just raised its dividend, and analysts like it better.<\/p>\n

For one, I view analyst ratings as a great contrarian indicator\u2014investors tend to overvalue popular stocks and undervalue companies that the pros have shunned.<\/p>\n

Also, it\u2019s not so much that CWEN is bad and NEP is good. Instead, I think CWEN is good and NEP is great<\/em>, especially as it pertains to dividend growth.<\/p>\n

It\u2019s likely that both<\/em> stocks will find good homes in dividend portfolios as economic fears and Fed dovishness send investors fleeing into bond proxies.<\/p>\n

Suburban Propane Partners LP (SPH, 8.9% yield)<\/strong> is one of the most interesting names in propane outside of Hank Hill. This national propane supplier has been doing business for nearly a century, and it currently services 700 communities in 42 states. But also interesting are some of its most recent business moves. In 2022, it acquired a 25% equity stake in startup Independence Hydrogen, which provides clean hydrogen services. And this year, it spent $190 million on renewable natural gas assets in Arizona and Ohio.<\/p>\n

Warmer weather has kept a cap on shares of late and weighed on second- and third-quarter results. But in 2024, a return to colder weather, as well as heightened interest in yield, should drive interest in SPH, whose distribution accounts for just 60% of profits\u2014a more-than-comfortable coverage ratio.<\/p>\n

Also worth noting on the charts is an extended period of coiling that could resolve with a sharp move higher.<\/p>\n

Atlantica Sustainable Infrastructure (AY, 7.9% yield)<\/strong> is a U.K.-based company that specializes in\u2014you guessed it\u2014sustainable energy infrastructure. Specifically, 75% of its business is in renewable energy like solar and wind, with the rest in storage, transmission infrastructure, natural gas assets and water assets.<\/p>\n

The company recently released a solid report for the first half of its fiscal 2023. Revenues were up 1.4% year-over-year on a comparable basis, and net profits jumped from $4.1 million to $24.7 million. The dividend accounts for 83% of Atlantica\u2019s non-GAAP \u201ccash available for distribution\u201d (CAFD), which means that while its payout doesn\u2019t appear in imminent danger, it could remain frozen\u2014the company has now gone about a year and a half since its last payout hike.<\/p>\n

But would-be investors have a big question mark to consider. Back in February 2023, Atlantica\u2019s board initiated a strategic review \u201cto evaluate potential strategic alternatives that may be available to Atlantica to maximize shareholder value.\u201d That strategic review is still in process, with no set deadline.<\/p>\n

Brett Owens is chief investment strategist for <\/em>Contrarian Outlook<\/em>. For more great income ideas, get your free copy his latest special report: <\/em>Your Early Retirement Portfolio: Huge Dividends\u2014Every Month\u2014Forever.<\/p>\n

Disclosure: none<\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Utility stocks are the OG dividend payers. They\u2019re delightfully dull. They\u2019re dependable. They\u2019re always worth scouting for income\u2014and I\u2019ve got six 5%-plus dividends on deck to share with you today. I\u2019m pleasantly surprised that we still have a chance to buy utilities for reasonable prices right now. Despite a year\u2019s worth of worries about a […]<\/p>\n","protected":false},"author":1,"featured_media":62071,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-62070","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\n6 Utility Stocks Yielding Up To 8.9% | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Utility stocks are the OG dividend payers. They\u2019re delightfully dull. They\u2019re dependable. 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