May 5, 2016
7 Good Utility Stocks Paying Steady Dividends
Utility stocks, best-known as safe havens for dividend-conscious retirees, have been on a tear. In the year’s first three months, the Dow Jones utility average returned 16.7% (including dividends), making it the quarter’s third-best performing asset category, behind only lean hogs (35.2%) and gold (16.5%).
But the surge in utility shares means many of the stocks are now richly valued and vulnerable to a broad market correction or to a rise in interest rates. The average utility in Standard & Poor’s 500-stock index trades at 18 times estimated 2016 earnings, compared with an average price-earnings ratio of 16 over the past two years and with 17 for the S&P 500 itself, according to FactSet Research Systems. “Dividends are secure and should grow, but prices could rise and fall sharply in this environment” of ultra-low interest rates and elevated valuations, says Morningstar analyst Travis Miller.
Here are seven utility stocks worth considering...