As coal prices regain their competitive edge, investors should watch TECO Energy, Inc. (NYSE:TE), Great Plains Energy Incorporated (NYSE:GXP), and FirstEnergy Corp. (NYSE:FE).
TECO Energy, Inc. (NYSE:TE) uses coal for 61% of its generation capacity and owns or operates 11 Appalachian coal companies to cut out middleman margins. Great Plains counted on coal for a whopping 83% of its 2012 generation, while FirstEnergy Corp. (NYSE:FE)’s coal consumption clocked in at 64%.
While TECO Energy, Inc. (NYSE:TE) relies on natural gas for the remainder of its generation, Great Plains Energy Incorporated (NYSE:GXP) natural gas use accounts for just 2% of its capacity, and natural gas is only 6% of FirstEnergy Corp. (NYSE:FE)’s energy portfolio.
Coal or natural gas?
The EIA’s new energy outlook changes the game for natural gas. There’s no doubt that prices are headed higher in the future, but the exact amount depends on a variety of different outcomes. The greatest lesson learned from this report isn’t to cuddle up to coal or naysay natural gas: it’s to diversify.
If the four scenarios above are any evidence, energy prices are fickle and no one’s sure where they’re headed. Keep your portfolio picks diverse and you’ll be well on your way to pulling sustainable profits and dividends for years to come.
The article Will Coal Kill Natural Gas Dividend Stocks? originally appeared on Fool.com and is written by Justin Loiseau.
Motley Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.The Motley Fool recommends Dominion Resources (NYSE:D).
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