Dividend investing is popular again. Investors have taken to heart Jeremy Siegel's studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks.
The highest dividend yields can be very tantalizing. As long as a stock yielding 15% doesn't lose value, you'll make 15% in one year! In more cases than not, however, an astronomical yield is a bad sign for a stock. Since dividend yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business, and driven down its stock price.
Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.
I ran a screen for the highest-yielding utilities stocks and the only limitations I set are I'm only considering utilities and they must have a market cap greater than $300 million.
Here are the top 25 highest-yielding utilities the screen produced:
|
|
Company |
Market Cap (in millions) |
Dividend Yield |
|---|---|---|---|
|
1 |
Veolia Environnement |
$5,942 | 13.8% |
|
2 |
Ferrellgas Partners LP |
$1,582 | 9.6% |
|
3 |
Atlantic Power |
$1,482 | 8.6% |
|
4 |
CPFL Energia S.A. |
$12,676 | 7.5% |
|
5 |
Suburban Propane Partners LP |
$1,675 | 7.2% |
|
6 |
AmeriGas Partners LP | $2,512 | 6.7% |
|
7 |
Huaneng Power International | $9,041 | 6.5% |
|
8 |
Centrais Electricas Brasileiras S.A. | $18,987 | 6.4% |
|
9 |
Star Gas Partners, L.P. | $306 | 6.4% |
|
10 |
Spectra Energy Partners, LP | $2,972 | 6.1% |
|
11 |
National Grid | $33,734 | 6.0% |
|
12 |
Cia Energetica de Minas Gerais | $10,764 | 5.6% |
|
13 |
TransAlta | $4,578 | 5.6% |
|
14 |
Pepco Holdings | $4,426 | 5.5% |
|
15 |
Otter Tail | $776 | 5.5% |
|
16 |
Brookfield Infrastructure Partners L.P. | $3,437 | 5.4% |
|
17 |
Integrys Energy Group | $3,992 | 5.3% |
|
18 |
UIL Holdings | $1,736 | 5.0% |
|
19 |
Unitil | $302 | 5.0% |
|
20 |
Ameren | $7,832 | 5.0% |
|
21 |
FirstEnergy | $18,724 | 4.9% |
|
22 |
Vectren | $2,345 | 4.9% |
|
23 |
Exelon | $28,894 | 4.8% |
|
24 |
PPL | $16,811 | 4.8% |
|
25 |
Duke Energy | $27,801 | 4.8% |
Source: S&P Capital IQ.
These stocks are a good place to start your research, but they're not formal recommendations. Remember, their seemingly irresistible yields could be ticking time bombs, so do your own due diligence. Also, make sure you diversify your picks across various sectors. As investors relearn every decade or so, you never want to put all your eggs in one basket -- no matter how tempting the dividends are.
For more dividend stock ideas, click here to get The Motley Fool's free report: "11 Rock-Solid Dividend Stocks."
