The company is working on regulatory approvals for the transfer of its natural gas distribution business to Peoples Natural Gas for $720 million. Both companies hope to have such approvals by year end, but Equitable will be cutting the dividend payment as a result.
CenterPoint Energy, Inc. (NYSE:CNP)
For the record, I sold this one a couple of weeks ago. However, the increase in buying volume since edging past $21 has me thinking I have made a mistake! The reason for the buying surge was strong earnings. The stock again beat on analyst earnings-per-share expectations , as it has in the past seven quarters.
Its largest business, Houston Electric, reported core operating income of $492 million, which was just $4 million shy from 2011. The drop was attributed to “more normal weather,” which can’t be said for recent snowstorms in the South. The company added 45,000 new customers, marked by “a continued strong Houston economy”. They expect customer growth to increase by 2% for 2013.
Mild temperatures were also to blame for the comparable year-on-year revenue in its gas LDCs. The company attributed to a $47 million “loss” on the $226 million earned due to weather factors. This sector saw 22,000 new customers. Field services was a division revenue gainer, climbing to $214 million from $189 million. Helped by improved margins and a 9% increase in throughput commitments.
Duke Energy Corp (NYSE:DUK)
One of the most attractive things about this stock is its 4.4% dividend yield, helped by a 2% increase in payments over 2012. This for a stock which has seen a four-fold increase in price over the past 10 years. The stock experienced a weaker response to earnings than some of its peers, but it’s a long standing performer in the sector and a move above $71 will have it trading a new multi-year highs. Despite the longstanding rally, the stock enjoys a competitive P/E of 22.5, with a forward P/E of 15.
It edged analyst EPS estimates and comfortably beat on revenue. Duke Progress Energy operated for the last six months of 2012 (following a merger), serving electricity to 7.1 million customers. It operates a range of power plant types, from traditional coal-fired stations up to nuclear and alternative energy sources. In 2012 it added five new wind farms and three new solar farms, which deliver 650 megawatts to its portfolio (just over 1% of its base-load).
The outlook for 2013 is for something on par with 2012 for what will be the first full year for the merged company. Cost savings will help, but the company will look to provide “more perspective on 2013 and beyond” in the next few weeks.
In conclusion…
There are a number of potential candidates within the Utility sector which are worth attention. These three stocks are a good starting point. While Utility stocks are unlikely to double in value in six months, they will be a worthy contributor to returns. They will have their time to shine when interest in other sectors fade.
The article 5 Reasons to Buy Utility Stocks originally appeared on Fool.com and is written by Declan Fallon.
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