The dividend growth rate is an important factor in our dividend ranking system. We like to identify and buy companies that have a commitment to growing their dividend. Dividend increases drive stock prices higher and maintain yields as the stock price increases. Healthy companies with growing net income are able to increase their dividend on an annual basis.
We use the 5 year dividend growth rate in our evaluation of stocks and give a preference to any stock with a 5 year dividend growth rate over 5%. 10% growth rates are marked as exceptional.
For this list, we have only included utility dividend stocks that have increased their dividend for 10 consecutive years and have a 5 year dividend growth rate over 5%.
Each of these utility dividend paying stocks has a dividend yield of 3% or more.
UniSource Energy Corporation (UNS)
Unisource is a holding company that owns electric, power and energy development companies that provide power and energy to communities in the United States.
UNS is one of the top rated stocks on our best dividend stocks list because they have a dividend yield of 6.1%, a 5 year dividend growth rate of 7.3% and a payout ratio of 55.4%. Their 3 year net income growth rate is 24%. UNS has increased it’s dividend for each of the last 14 years.
New Jersey Resources Corporation (NJR)
New Jersey Resources Corporation operates in three different segments to provide retail and wholesale energy services to customers in the US. The segments they operate in are Gas distribution, energy services and Midstream assets.
NJR has a dividend yield of 3% and a payout ratio of 54% which is well below their 5 year payout ratio average of 80%. Their 5 year dividend growth rate is 8.4% and they have been raising dividends for each of the last 15 years. Their 3 year net income growth rate is over 21%.
Northeast Utilities (NU)
Northeast Utilities is a utility holding company that owns gas, power and electric companies that serve multiple states in the US.
Northeast Utilities has a dividend yield of 3.1% with a 5 year dividend growth rate of 8.7%. They have a payout ratio of 45% and have raised their dividend for each of the last 11 years. Their 3 year net income growth rate is of 16.3%.
NextEra Energy (NEE)
NextEra Energy Company is an electric power company that produces renewable energy from wind and solar. They have two operating subsidiaries. Florida Power and Light (distributes and sells electric energy in Florida) and NextEra Energy.
NEE has a dividend yield of 3.9% and a 5 year dividend growth rate of 7.7%. Their payout ratio just makes our cut at 59% (we like to see 60% or less). They have been raising their dividend for 15 consecutive years.
NSTAR is a holding company that delivers electric and natural gas to it’s 1.4 million customers in Massachusetts.
NST has a dividend yield of 3.7% and has a 5 year dividend growth rate of 7%. Their payout ratio is 68% and they have raised their dividend for each of the last 11 years. They have been paying dividends since 1879.