Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Atlantic Power Corp (AT), TECO Energy, Inc. (TE): Can Dead Dividends Deliver Growth?

Source: TE data by YCharts.

Beware the “Stairmaster”
Companies must decide for themselves whether dividends are the best method to return value to shareholders. Although it’s never inherently a bad idea to boost dividends, investors should beware the “Stairmaster.” A dividend stock that flexes its financial muscles quarter after quarter may not be using its resources intelligently. Step after step, The Southern Company (NYSE:SO) and Xcel Energy Inc (NYSE:XEL) have pushed their dividends higher through the worst of the Great Recession.

SO Dividend Chart

Source: SO Dividend data by YCharts.

Atlantic, why can’t you be more like Exelon Corporation (NYSE:EXC)?
Atlantic wasn’t the only utility to dice up its dividend this past quarter. Exelon Corporation (NYSE:EXC) announced on Feb. 7 that it would slash its dividend by a whopping 40%. But unlike Atlantic, Exelon’s stock has risen 12% since its earnings report. That’s 4.5 percentage points above the Dow Jones U.S. Utilities Price Index and more than nine percentage points better than the S&P 500‘s return.

EXC Chart

Source: EXC data by YCharts.

Which dividends deliver?
Regardless of all the number crunching and examples, company fundamentals are irrevocably the means to your dividend end. Some haircuts look good, some look bad, some are necessary, and some aren’t. Pick your investments wisely and you’ll end up with some handsome profits.

The article Can Dead Dividends Deliver Growth? originally appeared on Fool.com.

Fool contributor Justin Loiseau has no position in any stocks mentionedbut he does use electricity. You can follow him on Twitter @TMFJLo and on Motley Fool CAPS @TMFJLo.The Motley Fool recommends Exelon and Southern Company.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.