In this article, we discuss 10 utility dividend stocks with high yields.
The transition from fossil fuels to renewable energy sources has been a key theme influencing the overall outlook of the utilities sector over the past several years. Surging energy prices, due to post-pandemic demand, supply chain disruptions, and the Russian invasion of Ukraine, have given increased impetus to the pace of growth in the solar, wind, and battery storage industries. According to a report by the Institute for Energy Economics and Financial Analysis, the proportion of clean energy sources in US power generation will reach over 33% by 2026.
The previous estimate in this regard had been 30%, but new offshore wind projects have forced the institute to revise the initial prediction. If the nuclear energy projects, which are also considered important to the overall energy transition plans, are included in the estimate, the share of carbon-free energy sources in US power generation rises above 50%. A big driver of this change is corporate demand for clean energy, which could add 94 gigawatts of renewable energy capacity to the US grid by 2030.
As policy makers struggle with fossil fuel prices and energy security, utility stocks like Duke Energy Corporation (NYSE:DUK), Consolidated Edison, Inc. (NYSE:ED), and American Electric Power Company, Inc. (NASDAQ:AEP) are attracting the attention of investors who want safety from market volatility. The compelling products offered by these firms in the renewables sector and the reliability of their legacy business models is further fueling the winds of change in the sector that has suffered from historic underinvestment.
Our Methodology
The companies that operate in the utilities sector and have a dividend yield of more than 3% were selected for the list. The business fundamentals and analyst ratings of these firms are also discussed to provide further context. Hedge fund sentiment was included as a classifier as well. Data from around 900 elite hedge funds tracked by Insider Monkey in Q4 2021 was used to quantify the hedge fund sentiment around each stock.
High-voltage power lines. Electricity distribution station. high voltage electric transmission tower. Distribution electric substation with power lines and transformers.
Utility Dividend Stocks with High Yields
10. New Jersey Resources Corporation (NYSE:NJR)
Number of Hedge Fund Holders: 8
Dividend Yield as of May 16: 3.29%
New Jersey Resources Corporation (NYSE:NJR) operates as an energy services holding firm. On May 5, the company posted financial results for the second fiscal quarter of 2022, reporting earnings per share of $1.36, beating estimates by $0.09. The revenue over the period was $912 million, up more than 13% year-on-year and beating estimates by $34 million. The firm raised earnings per share guidance for 2022, saying it expected EPS to range from $2.3 to $2.4 from previously announced $2.2 to $2.3. Consensus estimates stand at $2.28.
On April 29, Mizuho analyst Gabriel Moreen maintained a Neutral rating on New Jersey Resources Corporation (NYSE:NJR) stock and raised the price target to $45 from $42, noting that gas utility valuations had increased given the Russian invasion of Ukraine.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in New Jersey Resources Corporation (NYSE:NJR), with 600,879 shares worth more than $24 million.
Just like Duke Energy Corporation (NYSE:DUK), Consolidated Edison, Inc. (NYSE:ED), and American Electric Power Company, Inc. (NASDAQ:AEP), New Jersey Resources Corporation (NYSE:NJR) is one of the utility stocks on the radar of elite hedge funds.
9. South Jersey Industries, Inc. (NYSE:SJI)
Number of Hedge Fund Holders: 13
Dividend Yield as of May 16: 3.71%
South Jersey Industries, Inc. (NYSE:SJI) provides energy-related products and services. The company has an impressive dividend history stretching back thirty-two years. Over the past sixteen years, the dividend payouts have grown consistently. The sector median in this regard is just seven years. On March 1, the company declared a quarterly dividend of $0.31 per share, in line with previous. In earnings results for the first quarter of 2022, the firm posted a 22% year-on-year increase in revenue.
South Jersey Industries, Inc. (NYSE:SJI) serves more than 380,000 residential, commercial, and industrial customers in New Jersey. In addition to providing oil and gas services, it also owns and runs rooftop solar generation sites.
Among the hedge funds being tracked by Insider Monkey, Ohio-based investment firm Diamond Hill Capital is a leading shareholder in South Jersey Industries, Inc. (NYSE:SJI), with 2.6 million shares worth more than $68 million.
In its Q3 2021 investor letter, FPA Queens Road, an asset management firm, highlighted a few stocks and South Jersey Industries, Inc. (NYSE:SJI) was one of them. Here is what the fund said:
“South Jersey Industries, Inc. (NYSE:SJI) shares fell due in part to the cancellation of the PennEast pipeline. The pipeline, which South Jersey Industries, Inc. (NYSE:SJI) was to be a partner in, was slated to deliver 1.1 billion cubic feet per day of natural gas from the Marcellus shale region to New Jersey and Pennsylvania. While the regulatory environment in New Jersey has historically been favorable, the state’s role in preventing the PennEast pipeline’s construction is causing us to reassess the regulatory environment there. The company currently pays a 5.5% dividend yield and is expected to continue its long history of slow but steady normalized earnings growth.”
8. NorthWestern Corporation (NASDAQ:NWE)
Number of Hedge Fund Holders: 18
Dividend Yield as of May 16: 4.25%
NorthWestern Corporation (NASDAQ:NWE) provides electricity and natural gas to residential, commercial, and industrial customers. The company has a solid track record in the dividend space as it has consistently paid a growing dividend to shareholders for the past sixteen years. On April 29, it declared a quarterly dividend of $0.63 per share, in line with previous. The firm plans to invest $2 billion in the next five years to modernize services. The investment includes plans to expand capacity and reduce the production shortfall.
On April 19, Barclays analyst Eric Beaumont upgraded NorthWestern Corporation (NASDAQ:NWE) stock to Equal Weight from Underweight and raised the price target to $62 from $57, noting the shares now had a more balanced risk/reward profile.
At the end of the fourth quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $106 million in NorthWestern Corporation (NASDAQ:NWE), up from 14 in the previous quarter worth $37 million.
7. Portland General Electric Company (NYSE:POR)
Number of Hedge Fund Holders: 22
Dividend Yield as of May 16: 3.85%
Portland General Electric Company (NYSE:POR) is an integrated electric utility company. On April 28, the firm posted earnings for the first quarter of 2022, reporting a revenue of $626 million, up 2.8% compared to the revenue over the same period last year and beating analysts’ expectations by $15 million. The firm also revised 2022 guidance from $2.75-$2.90 to $2.50-$2.65 per diluted share. The consensus estimate in this regard was $2.82. The firm cited reductions to 2020 regulatory deferrals as one of the reasons behind the revision.
On April 29, Mizuho analyst Paul Fremont kept a Buy rating on Portland General Electric Company (NYSE:POR) stock but lowered the price target to $56 from $61, highlighting that the firm had decreased 2022 guidance to reflect increasing costs.
At the end of the fourth quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $80.6 million in Portland General Electric Company (NYSE:POR), up from 15 in the previous quarter worth $80.2 million.
In its Q3 2021 investor letter, Miller Howard Investments, an asset management firm, highlighted a few stocks and Portland General Electric Company (NYSE:POR) was one of them. Here is what the fund said:
“Other stocks providing balance against our cyclicals include Portland General Electric Company (NYSE:POR). They pay good dividends supported by stable business models and have a conservative amount of debt. The dividend yield on our Income-Equity Strategy is now 3.6%. The No-MLP version yield is 3.5%. Both yields are roughly 2.5 times the yield on the S&P 500 Index, and we are seeing dividend increases across our portfolios. Our income advantage over the broad market is significant, yet we also believe that we have enough cyclical tilt to perform well in a recovery. We continue to monitor a variety of risks, with inflation and COVID-19 trends being most important.”
6. MDU Resources Group, Inc. (NYSE:MDU)
Number of Hedge Fund Holders: 22
Dividend Yield as of May 16: 3.36%
MDU Resources Group, Inc. (NYSE:MDU) engages in the energy delivery business. In the past thirty years, the company has consistently paid a dividend to shareholders. The sector median in this regard is just thirteen years. These payouts have also registered consistent growth over the past eighteen years. On May 11, the company declared a quarterly dividend of $0.2175 per share. In earnings results for the first quarter of 2022, the firm posted a revenue of $1.42 billion, up 15% year-on-year and beating estimates by $350 million.
MDU Resources Group, Inc. (NYSE:MDU) serves customers in Montana, North Dakota, South Dakota, and Wyoming. It owns and runs 3,500 miles of transmission lines and 4,800 miles of distribution lines in these states.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based firm AQR Capital Management is a leading shareholder in MDU Resources Group, Inc. (NYSE:MDU), with 1.8 million shares worth more than $56 million.
In addition to Duke Energy Corporation (NYSE:DUK), Consolidated Edison, Inc. (NYSE:ED), and American Electric Power Company, Inc. (NASDAQ:AEP), MDU Resources Group, Inc. (NYSE:MDU) is one of the utility dividend stocks that investors are monitoring as inflation rises.
5. Consolidated Edison, Inc. (NYSE:ED)
Number of Hedge Fund Holders: 22
Dividend Yield as of May 16: 3.31%
Consolidated Edison, Inc. (NYSE:ED) has stakes in the electric, gas, and steam delivery businesses. The company posted earnings for the first quarter of 2022 on May 5, reporting a revenue of $4 billion, up over 10% compared to the revenue over the same period last year and beating analyst expectations by $350 million. The firm also reaffirmed previous guidance on earnings per share for 2022, saying it expected EPS to range from $4.40 to $4.60 per share against consensus estimates of $4.49.
On April 25, Credit Suisse analyst Nicholas Campanella initiated coverage of Consolidated Edison, Inc. (NYSE:ED) stock with a Neutral rating and a price target of $100, underlining that the stock was “fairly valued” given growth numbers of gas customers in the New York area.
At the end of the fourth quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $323 million in Consolidated Edison, Inc. (NYSE:ED), compared to 24 in the preceding quarter worth $364 million.
4. Pinnacle West Capital Corporation (NYSE:PNW)
Number of Hedge Fund Holders: 30
Dividend Yield as of May 16: 4.64%
Pinnacle West Capital Corporation (NYSE:PNW) provides retail and wholesale electric services. The firm has an impressive dividend history stretching back close to three decades. In the past ten years, the payouts have registered consistent growth. The sector median in this regard is just seven years. On April 20, the firm declared a quarterly dividend of $0.85 per share, in line with previous. In earnings results for the first quarter of 2022, the company beat market expectations on revenue by over $90 million.
On April 4, RBC Capital analyst Shelby Tucker maintained a Sector Perform rating on Pinnacle West Capital Corporation (NYSE:PNW) stock and raised the price target to $80 from 76, noting that the firm was making “incremental progress” to come back from the rate case disappointments of 2021.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Pinnacle West Capital Corporation (NYSE:PNW), with 707,064 shares worth more than $49 million.
3. UGI Corporation (NYSE:UGI)
Number of Hedge Fund Holders: 31
Dividend Yield as of May 16: 3.70%
UGI Corporation (NYSE:UGI) markets energy-related products and services. The company posted earnings for the second fiscal quarter of 2022 on May 4, reporting earnings per share of $1.91, beating estimates by $0.07. The revenue over the period was $3.4 billion, up 34% year-on-year and beating estimates by $620 million. The firm also declared a quarterly dividend of $0.36 per share on May 4, an increase of 4.3% from the previous dividend of $0.345 per share. The dividend is payable to shareholders by mid-June.
On March 22, Barclays analyst Christine Cho maintained an Equal Weight rating on UGI Corporation (NYSE:UGI) stock with a price target of $40, predicting that gas prices would moderate in the coming months and recoup margin headwinds in the sector.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm First Eagle Investment Management is a leading shareholder in UGI Corporation (NYSE:UGI), with 8.6 million shares worth more than $396 million.
2. Dominion Energy, Inc. (NYSE:D)
Number of Hedge Fund Holders: 34
Dividend Yield as of May 16: 3.19%
Dominion Energy, Inc. (NYSE:D) produces and distributes energy. On March 16, the company announced that the Virginia State Corporation Commission had granted it permission to expand solar and energy storage projects in the state for utility customers. According to the firm, the expansion plans extend to a total of 15 projects in the state. The projects will be completed in 2022 and 2023 and will add an average of $1.13 to the monthly bill of the typical residential customer in the region.
In late January, Barclays analyst Eric Beaumont reinstated coverage of Dominion Energy, Inc. (NYSE:D) stock with an Equal Weight rating and a price target of $86, noting that the firm had “exceptional visibility” in long-term capital deployment opportunities.
Among the hedge funds being tracked by Insider Monkey, Ohio-based investment firm Diamond Hill Capital is a leading shareholder in Dominion Energy, Inc. (NYSE:D), with 3.6 million shares worth more than $284 million.
1. Duke Energy Corporation (NYSE:DUK)
Number of Hedge Fund Holders: 36
Dividend Yield as of May 16: 3.60%
Duke Energy Corporation (NYSE:DUK) is a North Carolina-based energy company. On May 11, the company announced that it had won an auction for two leases to develop wind power projects at a site in federal waters. The bids, won in partnership with TotalEnergies, equal $315 million, with Duke paying $155 million. The projects are part of a larger plan by US President Biden to push 30 GW of offshore wind power by 2030. The firm is also working on another offshore wind project that will power nearly 375,000 homes in the Wilmington area.
On May 10, Wells Fargo analyst Neil Kalton maintained an Equal Weight rating on Duke Energy Corporation (NYSE:DUK) stock and raised the price target to $120 from $109, highlighting the “improving regulatory backdrop and substantial energy transition opportunities post 2025”.
At the end of the fourth quarter of 2021, 36 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Duke Energy Corporation (NYSE:DUK), up from 32 in the preceding quarter worth $687 million.
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Disclosure. None. 10 Utility Dividend Stocks with High Yields is originally published on Insider Monkey.
