Top Five Utility Stocks According to Market Cap

Utilities are a favorite among investors during both good times and volatile market conditions. Many utility stocks tend to be relatively stable long-term value plays as they pay decent dividends. For the most part, utilities have a solid business model and enjoy monopolies in the territory they operate in due to state regulations. While the prices they charge are also highly regulated, they usually get approvals for rate increases. So far this year, the utility components in the S&P 500 Index is down 17.33% while the S&P is off 16.54% as of the market close Monday.

The following is a brief overview of the top 5 US utilities based on market cap:

1. Exelon Corp (EXC) is one of the largest utility companies in the US with customers in Northern Illinois, Chicago, and Southeastern Pennsylvania including Philadelphia. With a market cap of $29B, the stock has a yield of 4.86% and a P/E of 1.73. Average annual earnings growth over the past 5 years is about 25%.

2. As the name implies, Southern Co. (SO) supplies electricity to customers in the states of Alabama, Georgia, Florida, and Mississippi. Currently Southern pays a 7.95% dividend. In the last 52 weeks, SO is down 18%. The 5 year annual earnings growth is a low 2.10%.

3. Florida-based FPL Group Inc. (FPL) is “engaged primarily in the generation, transmission, distribution and sale of electric energy.” Compared to Southern Co, earnings have grown at 100% annually in the last 5 years. Dividend growth rate in the same period is 8%. The dividend yield is 4.05%.

4. Dominion Resources Inc. (D) is a producer and distributor of both electricity and natural gas. Last year Dominion had $16B in revenue. With a dividend rate of 5.79% and a P/E of just 9.5, Dominion is attractive at current levels. Dominion’s annual dividend growth rate is 4.10%.

5. Charlotte, NC-based Duke Energy (DUK) operates in the mid-western states. Duke bought a Cincinnati, Ohio utility called Cinergy a few years ago. The gains promised by Duke as a result of this merger did not materialize. The current yield of DUK is 6.99%. Duke’s profit margin is about 10%.

Disclosure: Long FPL, DUK

Comments

[novice inve...:]

As always, every time I read an article at Seeking Alpha
I learn something new about stocks and investing.

Do you think I picked a great time to get interested
in stocks.....Last year when all the volatility started
ie: Bear Stearns, etc.?

With all the help from Seeking Alpha and others,
I probably was able to learn more in one year than
at any other time in history except for slightly similar
times in the 70's & 80's.

Thank you again for such informative articles.

Mar 18 06:08 PM

[fran:]

NOVICE--

there is never a good time nor bad time to enter the market, as over time you will see an ever changing set of circumstances/challenges. make certain you read the book titled "RULE ONE" before you proceed too far. also aquaint yourself with all asset classes. SA is one of many sources. choose your sources carefully; take time. the market you see today will return quicker than you think.


On Mar 18 06:08 PM novice investor wrote:

> As always, every time I read an article at Seeking Alpha
> I learn something new about stocks and investing.
>
> Do you think I picked a great time to get interested
> in stocks.....Last year when all the volatility started
> ie: Bear Stearns, etc.?
>
> With all the help from Seeking Alpha and others,
> I probably was able to learn more in one year than
> at any other time in history except for slightly similar
> times in the 70's & 80's.
>
> Thank you again for such informative articles.

Mar 19 10:53 AM

[GRAY:]

Seeking Alpha is great, I learn much
about the stock market and dividends
Keep the great job.

Mar 19 12:59 PM

[GRAY:]

Does anyone know the highest, safest
dividend company and save me alot
of work investing.

Mar 19 01:00 PM

[bbowen7:]

Size, yield, and PE are factors in electric utilities, but there are lots of other considerations - high among them are regulatory climate and economic growth in their service area, degree of generation versus distribution, and means of power generation. On the last point, the Obama administration is committed to crushing coal-based utilities, and does not support new nuclear capacity (the most viable clean high volume technology.) Thus, I like Excelon, the largest nuclear generator.

Mar 19 01:11 PM

[spectre:]

With consideration for the stimulus in infrastructure and requirements for obabas' emphasis on green renewables, I have to ask the question: 'Which regulated utility Co. is in positioned best to capitalize?'
Seems to me duke power........any feedback anyone?

Mar 20 10:30 AM