6 Utility Dividend Buys Yielding 4% Or Better

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 |  Includes: CNP, DUK, ED, ETR, NI, VVC
by: Dividend Kings

In recent weeks, the stock market has been very volatile and has been trending down. When the stock market is in bear mode, many investors will move their money to defensive stocks, such as utilities. Investing in utility companies can be an excellent way for an investor to protect his capital and ensure a stream of dividend income.

This article will evaluate the stocks of six utility companies that are consistently profitable and pay dividends with yields in excess of 4%. My analysis concludes that CenterPoint Energy Inc. (NYSE:CNP), Duke Energy Corp. (NYSE:DUK), Entergy Corp. (NYSE:ETR), NiSource Inc. (NYSE:NI), Consolidated Edison Inc. (NYSE:ED) and Vectren Corp. (VVC) are good buys right now.

CenterPoint Energy Inc. has a market cap of $7.92 billion with a price to earnings ratio of 5.85. The stock has traded in a 52-week range between $15.09 and $21.47. The stock is currently trading around $19. The company reported 2010 revenues of $8.7 billion compared to revenues of $8.2 billion in 2009. The year 2010 net income was $442 million compared to net income of $372 million in 2009.

One of CNP’s competitors is American Electric Power Inc. (NYSE:AEP). AEP is currently paying around $37 with a market cap of $17.96 billion and a price to earnings ratio of 9.9. AEP pays a dividend which yields 5.1% versus CNP, whose dividend yields 4.2%.

CNP owns Houston Electric LLC and runs a natural gas distribution system in six states. The company has been profitable in nine out of the last ten years and has paid quarterly dividends since 1970. The company increased its 2010 net income by 19%. Over the last five years, CNP has increased its dividend five times by 32%.

In addition to the growing earnings and dividend income, the stock has performed well, and is up 19.17% over the last 52 weeks and 68.5% over the last three years. Investing in CNP is a relatively safe investment in a volatile market. CNP offers investors a relatively cheap stock, with growing earnings and dividend income, along with the potential for capital appreciation. I rate CNP as a buy.

Duke Energy Corporation has a market cap of $26.37 billion with a price to earnings ratio of 14.32. The stock has traded in a 52 week range between $16.87 and $21.02. The stock is currently trading around $20. The company reported third quarter revenues of $3.9 billion compared to revenues of $3.9 billion in the third quarter of 2010. Third quarter net income was $472 million compared to net income of $670 million in the third quarter of 2010.

One of DUK's competitors is the Constellation Energy Group (NYSE:CEG). CEG is currently trading around $38 with a market cap of $7.65 billion and a price to earnings ratio of 18.94. CEG pays a dividend which yields 2.5% versus DUK whose dividend yields 5.1%.

DUK primarily operates as an electric utility company. The company has been profitable in each of the last ten years. In 2010, the company increased its revenues by 12% and net income by 30%. The company has paid a quarterly dividend since 1982, and since 2007 it has increased its dividend five times by 19%. The stock price is up by 13.02% over the last 52 weeks and 51% over the last three years. I consider DUK to be a safe investment even in a bear market. I like DUK’s stock performance and high yield dividend. I rate DUK as a buy.

Entergy Corporation has a market cap of $11.72 billion with a price to earnings ratio of 8.4. The stock has traded in a 52 week range between $57.60 and $74.50. The stock is currently trading around $67. The company reported third quarter revenues of $3.4 billion compared to revenues of $3.3 billion in the third quarter of 2010. Third quarter net income was $633 million compared to net income of $498 million in the third quarter of 2010.

One of ETR competitors is Southern Company (NYSE:SO). SO is currently trading around $42 with a market cap of $36.42 billion and a price to earnings ratio of 17.34. SO pays a dividend which yields 4.5%, versus ETR, whose dividend yields 5%.

ETR engages in the generation and distribution of electricity. The company has been profitable and has paid a strong dividend for many years. The company increased its year-over-year revenues by 3% and net income by 27%. Over the last five years, ETR has increased its dividend two times by 53.7% to $3.32. ETR’s stock is down by 5.7% over the last 52 weeks.

The stock has not done as well as other electricity providers because it generates electricity with nuclear power plants. Since the March 11 nuclear power plant disaster in Japan, the stock price has dropped by 6.6%. ETR’s stock has a lower valuation (price to earnings ratio 8.4/price to book ratio 1.3) than its competitors. ETR could be a good buy for investors that are not worried about a nuclear meltdown. I rate ETR as a buy.

NiSource Inc. has a market cap of $6 billion with a price to earnings ratio of 19.59. The stock has traded in a 52 week range between $16.65 and $23. The stock is currently trading around $21. The company reported third quarter revenues of $1 billion compared to revenues of $1.1 billion in the third quarter of 2010. Third quarter net income was $35 million compared to net income of $33 million in the third quarter of 2010.

One of NI’s competitors is Dominion Resources Inc. (NYSE:D). D is currently trading around $50 with a market cap of $28.2 billion and price to earnings ratio of 18.96. D pays a dividend which yields 4%, versus NI, whose dividend yields 4.3%.

NI is a holding company that offers natural gas and electricity services. The company has been profitable in each of the last ten years. The company year-over-year third quarter revenues were down by 10%, while its net income was up by 5%. NI has paid quarterly dividends since 1984 and has paid an annual dividend of $0.92 since 2003. The stock has performed very well, and is up by 26.63% over the last 52 weeks, and 112% over the last three years. The company has a high debt to equity ratio 151.89, and its valuation is higher than many of its competitors. However, NI has a strong business and provides its investors with consistent earnings and a hefty dividend. I rate the stock as a buy.

Consolidated Edison Inc. has a market cap of $16.74 billion with a price to earnings ratio of 15.39. The stock has traded in a 52 week range between $47.51 and $57.38. The stock is currently trading near the top of its 52 week range at around $57. The company reported third quarter revenues of $3.6 billion compared to revenues of 3.7 billion in 2010. Third quarter net income was $386 million compared to net income of $353 million in 2010.

One of ED’s competitors is NSTAR (NYSE:NST). NST is currently trading around $44 with a market cap of $4.56 billion and a price to earnings ratio of 17.54. NST pays a dividend which yields 3.9%, versus ED, whose dividend yields 4.2%.

ED is a holding company that offers natural gas and electricity services. The company has been profitable in each of the last ten years, and in 2010 it increased its revenues by 2% and net income by 13%. The company has paid a quarterly dividend since 1970 and has increased its dividend in each of the last 36 years.

The stock has performed well and is up by 19% over the last 52 weeks and 65% over the last three years. Investors will find that there is nothing spectacular about ED. The company will consistently increase its earnings and its dividend, and history shows that the stock price will also move up. ED is a stock for hands off investors that like to buy and hold. I rate ED as a buy.

Vectren Corporation has a market cap of $2.22 billion with a price to earnings ratio of 15.85. The stock has traded in a 52 week range between $23.65 and $29.54. The stock is currently trading around $27. The company reported third quarter revenues of $539 million compared to revenues of $422 million in the third quarter of 2010. Third quarter net income was $35 million compared to net income of $16 million in the third quarter of 2010.

One of VVC’s competitors is XCEL Energy Inc. (NYSE:XEL). XEL is currently trading around $25 with a market cap of $12.22 billion and a price to earnings ratio of 14.67. XEL pays a dividend which yields 4.1%, versus VVC, whose dividend yields 5.2%.

VVC provides natural gas and electricity distribution services in Indiana and Ohio. VVC has a long record of profitability and has increased its year-over-year third quarter revenues by 27% and net income by 115%. VVC has an excellent dividend paying record. It has paid quarterly dividends for decades and has increased the dividend five times by 13% over the last five years.

The stock performance has been mediocre. The stock is up by 3.9% over the last 52 weeks and 13.7% over the last three years. VVC investors can sleep well at night as the company has been profitable for decades and has increased its dividend for 52 consecutive years. VVC is an excellent stock for buy and hold investors, and I rate it as a buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.