Thursday, December 5, 2013

Five Electric Utilities Which should you buy?



I am constantly looking for ideas about income investing and analysis of stocks.  Utilities are always on my radar.    


Today I reviewed an article published in Seeking Alpha that was an extensive review of electric utilities.   

The article’s author, Jonathan Bluhm, did a lot of work narrowing down his choices to five electric utility stocks.


Five Electric Utilities:

I applied my Dividend Machine Strategy to these five stocks to see how they stack up.  The table of my analysis is presented below.





Once you read his article (click here for the link) you will see that he and I came to different conclusions.


Two Dividend Machines:


I immediately eliminated EIX because it does not earn as much as it pays out and the yield is less than my required three percent.   ETR has not increased the dividend every year as is required to be a Dividend Machine and DTE has a short, five year history of dividend increases.  When I have the choice, I prefer a longer history of dividend increases.


That leaves XEL Energy, symbol XEL and Consolidated Edison, symbol ED.   I think that if you are going to buy one of these stocks it would be XEL simply on the basis of the dividend growth rate.   Over the past ten years, XEL has increased their dividend over four percent per year whereas ED has increased the dividend only .9 percent per year.


Consider these two companies, which are already in one or more of my Dividend Machine Portfolios for the income producing portion of your portfolio.


The Money Madam