In this article, we discuss 10 utility dividend stocks with high yields. If you want to read about some more utility stocks with high yields, click 5 Utility Dividend Stocks with High Yields.
The transition from fossil fuels to renewable energy sources has been a key theme influencing the overall outlook of the utilities sector over the past several years. Surging energy prices, due to post-pandemic demand, supply chain disruptions, and the Russian invasion of Ukraine, have given increased impetus to the pace of growth in the solar, wind, and battery storage industries. According to a report by the Institute for Energy Economics and Financial Analysis, the proportion of clean energy sources in US power generation will reach over 33% by 2026.
The previous estimate in this regard had been 30%, but new offshore wind projects have forced the institute to revise the initial prediction. If the nuclear energy projects, which are also considered important to the overall energy transition plans, are included in the estimate, the share of carbon-free energy sources in US power generation rises above 50%. A big driver of this change is corporate demand for clean energy, which could add 94 gigawatts of renewable energy capacity to the US grid by 2030.
As policy makers struggle with fossil fuel prices and energy security, utility stocks like Duke Energy Corporation (NYSE:DUK), Consolidated Edison, Inc. (NYSE:ED), and American Electric Power Company, Inc. (NASDAQ:AEP) are attracting the attention of investors who want safety from market volatility. The compelling products offered by these firms in the renewables sector and the reliability of their legacy business models is further fueling the winds of change in the sector that has suffered from historic underinvestment.
Our Methodology
The companies that operate in the utilities sector and have a dividend yield of more than 3% were selected for the list. The business fundamentals and analyst ratings of these firms are also discussed to provide further context. Hedge fund sentiment was included as a classifier as well. Data from around 900 elite hedge funds tracked by Insider Monkey in Q4 2021 was used to quantify the hedge fund sentiment around each stock.
High-voltage power lines. Electricity distribution station. high voltage electric transmission tower. Distribution electric substation with power lines and transformers.
Utility Dividend Stocks with High Yields
10. New Jersey Resources Corporation (NYSE:NJR)
Number of Hedge Fund Holders: 8
Dividend Yield as of May 16: 3.29%
New Jersey Resources Corporation (NYSE:NJR) operates as an energy services holding firm. On May 5, the company posted financial results for the second fiscal quarter of 2022, reporting earnings per share of $1.36, beating estimates by $0.09. The revenue over the period was $912 million, up more than 13% year-on-year and beating estimates by $34 million. The firm raised earnings per share guidance for 2022, saying it expected EPS to range from $2.3 to $2.4 from previously announced $2.2 to $2.3. Consensus estimates stand at $2.28.
On April 29, Mizuho analyst Gabriel Moreen maintained a Neutral rating on New Jersey Resources Corporation (NYSE:NJR) stock and raised the price target to $45 from $42, noting that gas utility valuations had increased given the Russian invasion of Ukraine.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in New Jersey Resources Corporation (NYSE:NJR), with 600,879 shares worth more than $24 million.
Just like Duke Energy Corporation (NYSE:DUK), Consolidated Edison, Inc. (NYSE:ED), and American Electric Power Company, Inc. (NASDAQ:AEP), New Jersey Resources Corporation (NYSE:NJR) is one of the utility stocks on the radar of elite hedge funds.
9. South Jersey Industries, Inc. (NYSE:SJI)
Number of Hedge Fund Holders: 13
Dividend Yield as of May 16: 3.71%
South Jersey Industries, Inc. (NYSE:SJI) provides energy-related products and services. The company has an impressive dividend history stretching back thirty-two years. Over the past sixteen years, the dividend payouts have grown consistently. The sector median in this regard is just seven years. On March 1, the company declared a quarterly dividend of $0.31 per share, in line with previous. In earnings results for the first quarter of 2022, the firm posted a 22% year-on-year increase in revenue.
South Jersey Industries, Inc. (NYSE:SJI) serves more than 380,000 residential, commercial, and industrial customers in New Jersey. In addition to providing oil and gas services, it also owns and runs rooftop solar generation sites.
Among the hedge funds being tracked by Insider Monkey, Ohio-based investment firm Diamond Hill Capital is a leading shareholder in South Jersey Industries, Inc. (NYSE:SJI), with 2.6 million shares worth more than $68 million.
In its Q3 2021 investor letter, FPA Queens Road, an asset management firm, highlighted a few stocks and South Jersey Industries, Inc. (NYSE:SJI) was one of them. Here is what the fund said:
“South Jersey Industries, Inc. (NYSE:SJI) shares fell due in part to the cancellation of the PennEast pipeline. The pipeline, which South Jersey Industries, Inc. (NYSE:SJI) was to be a partner in, was slated to deliver 1.1 billion cubic feet per day of natural gas from the Marcellus shale region to New Jersey and Pennsylvania. While the regulatory environment in New Jersey has historically been favorable, the state’s role in preventing the PennEast pipeline’s construction is causing us to reassess the regulatory environment there. The company currently pays a 5.5% dividend yield and is expected to continue its long history of slow but steady normalized earnings growth.”
8. NorthWestern Corporation (NASDAQ:NWE)
Number of Hedge Fund Holders: 18
Dividend Yield as of May 16: 4.25%
NorthWestern Corporation (NASDAQ:NWE) provides electricity and natural gas to residential, commercial, and industrial customers. The company has a solid track record in the dividend space as it has consistently paid a growing dividend to shareholders for the past sixteen years. On April 29, it declared a quarterly dividend of $0.63 per share, in line with previous. The firm plans to invest $2 billion in the next five years to modernize services. The investment includes plans to expand capacity and reduce the production shortfall.
On April 19, Barclays analyst Eric Beaumont upgraded NorthWestern Corporation (NASDAQ:NWE) stock to Equal Weight from Underweight and raised the price target to $62 from $57, noting the shares now had a more balanced risk/reward profile.
At the end of the fourth quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $106 million in NorthWestern Corporation (NASDAQ:NWE), up from 14 in the previous quarter worth $37 million.
7. Portland General Electric Company (NYSE:POR)
Number of Hedge Fund Holders: 22
Dividend Yield as of May 16: 3.85%
Portland General Electric Company (NYSE:POR) is an integrated electric utility company. On April 28, the firm posted earnings for the first quarter of 2022, reporting a revenue of $626 million, up 2.8% compared to the revenue over the same period last year and beating analysts’ expectations by $15 million. The firm also revised 2022 guidance from $2.75-$2.90 to $2.50-$2.65 per diluted share. The consensus estimate in this regard was $2.82. The firm cited reductions to 2020 regulatory deferrals as one of the reasons behind the revision.
On April 29, Mizuho analyst Paul Fremont kept a Buy rating on Portland General Electric Company (NYSE:POR) stock but lowered the price target to $56 from $61, highlighting that the firm had decreased 2022 guidance to reflect increasing costs.
At the end of the fourth quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $80.6 million in Portland General Electric Company (NYSE:POR), up from 15 in the previous quarter worth $80.2 million.
In its Q3 2021 investor letter, Miller Howard Investments, an asset management firm, highlighted a few stocks and Portland General Electric Company (NYSE:POR) was one of them. Here is what the fund said:
“Other stocks providing balance against our cyclicals include Portland General Electric Company (NYSE:POR). They pay good dividends supported by stable business models and have a conservative amount of debt. The dividend yield on our Income-Equity Strategy is now 3.6%. The No-MLP version yield is 3.5%. Both yields are roughly 2.5 times the yield on the S&P 500 Index, and we are seeing dividend increases across our portfolios. Our income advantage over the broad market is significant, yet we also believe that we have enough cyclical tilt to perform well in a recovery. We continue to monitor a variety of risks, with inflation and COVID-19 trends being most important.”
6. MDU Resources Group, Inc. (NYSE:MDU)
Number of Hedge Fund Holders: 22
Dividend Yield as of May 16: 3.36%
MDU Resources Group, Inc. (NYSE:MDU) engages in the energy delivery business. In the past thirty years, the company has consistently paid a dividend to shareholders. The sector median in this regard is just thirteen years. These payouts have also registered consistent growth over the past eighteen years. On May 11, the company declared a quarterly dividend of $0.2175 per share. In earnings results for the first quarter of 2022, the firm posted a revenue of $1.42 billion, up 15% year-on-year and beating estimates by $350 million.
MDU Resources Group, Inc. (NYSE:MDU) serves customers in Montana, North Dakota, South Dakota, and Wyoming. It owns and runs 3,500 miles of transmission lines and 4,800 miles of distribution lines in these states.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based firm AQR Capital Management is a leading shareholder in MDU Resources Group, Inc. (NYSE:MDU), with 1.8 million shares worth more than $56 million.
In addition to Duke Energy Corporation (NYSE:DUK), Consolidated Edison, Inc. (NYSE:ED), and American Electric Power Company, Inc. (NASDAQ:AEP), MDU Resources Group, Inc. (NYSE:MDU) is one of the utility dividend stocks that investors are monitoring as inflation rises.
Click to continue reading and see 5 Utility Dividend Stocks with High Yields.
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Disclosure. None. 10 Utility Dividend Stocks with High Yields is originally published on Insider Monkey.
