Whether it's water, electricity, gas, or any other power source, utility companies are an essential part of everyday life. This makes them ideal for investor consideration. Let's look at three companies that would make a great addition to your watchlist. We can help you keep tabs on your investments with MyWatchlist.com, our free, personalized stock-tracking service.
Here are three dividend stocks to consider adding to your watchlist.
The up and comer
Operating primarily in utilities, transport and energy, and timber sectors, Brookfield Infrastructure Partners
Currently, Brookfield has a dividend yield of 5.1%, while the industry average is 3.6%. Add to that a free cash flow of $78 million, interest coverage of 4.43, and a dividend that's grown 37.4% since 2009, and you're looking at a solid, growing company.
- Add Brookfield Infrastructure Partners to My Watchlist.
The poised for regrowth
To say that electricity and natural gas company National Grid
Currently, National Grid's P/E ratio is 11.9. Compared to peers Consolidated Edison's
And the icing on the cake? Between 2009 and 2010, National Grid grew its dividend paid per share by 8% and increased its net income from continuing operations to $3.4 billion in 2011. Not too shabby if you ask me, and all in all, National Grid looks good by the numbers.
- Add National Grid to My Watchlist.
The not so hot?
The first time I heard of PG&E
Currently, PG&E has a P/E ratio of 17.3 compared to its industry standard of 14.7. This shows that PG&E is slightly overpriced compared with its competitors. Additionally, PG&E's dividend yield is 4%, which is under the 4.3% average. The bad news keeps coming when you look at free cash flow. As of Dec. 31, 2010, PG&E had a negative cash flow of $596 million. Not good when you consider dividends get paid from free cash flow.
There are, however, two positives working for PG&E. First, it was able to raise its dividend paid per share by 8.3% since 2009, and second, its interest coverage is 3.43. So is a growing dividend enough to get me excited about PG&E's future? Maybe, but I'm going to wait and see if its P/E drops.
- Add PG&E to My Watchlist.
My Foolish bottom line
All utility companies are not created equal, but if you find one that looks good by the numbers, it'll often come with a great dividend. Add to that the fact that utility companies are a necessity -- no one wants to go back to candles and outhouses -- and you've got a company that could make a great addition to your portfolio.
Consider the three stocks above along with the 13 names in a free report from Motley Fool expert analysts, "13 High-Yielding Stocks to Buy Today." A senior retail analyst dubbed one of the picks "the dividend play of a lifetime." Tens of thousands have requested access to this report, and today I invite you to download it at no cost. To get instant access to the names of these 13 high yielders, simply click here -- it's free.
Fool contributor Katie Spence still has nightmares about sub-pump monsters but is working on it in therapy. She does not own shares of any company named above.
The Motley Fool owns shares of Brookfield Infrastructure Partners P.. Motley Fool newsletter services have recommended Brookfield Infrastructure Partners P. and National Grid. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.