In my continued search for some the best high-yielding stocks, I've come across three utility companies that pay very nice dividends. With yields between 3.9% and 4.2%, as of close on Friday April 27th, these three companies should be great additions to any dividend portfolio.
Dominion Resources (D) -With net income rising to $494 million when analysts were expecting $479 million, Dominion Resources beat year ago earnings by$0.04 cents/share and demonstrated a 4.87% growth rate. That being said Dominion Resources fell short of street expectations by just a penny. Analysts were calling for EPS of $0.87/share vs. actual earnings of $0.86/share.
Dominion Resources currently yields 4.1% ($2.11) and trades at a P/E ratio of 21.26 making it a very affordable stock for most investors. Even though quarterly earnings slightly missed analyst expectation, Dominion still demonstrated considerable growth. Investors should stay long on the company, not only because of recent guidance but because of growing interest by the company's management to invest in alternative means of energy. Most recently Dominion expressed its interest in leasing pieces of its property to the Federal Bureau of Ocean Energy Management in an effort develop wind energy. This expression of interest could lead to lower tax rates, exploratory grants, and government funding for the company.
CMS Energy Corporation (CMS) - This was by far one of the worst quarters CMS has experienced in a very long while. Net income took a nose dive, falling from $135 million this time last year to a dismal $67 million this year. That's a loss of nearly 50%, which gets even worse as revenue fell 15.2% compared to the same period last year. The street was expecting CMS to earn $0.39/share, which didn't bode very well considering the company posted earnings of $0.38/share which was $0.01/share off estimates.
Here's the bright side to CMS. Even though the company had a miss on all cylinders, they are currently trading at a 52-week high and presently yield 4.2% ($0.96/share). Investors shouldn't be too flustered by their most recent quarter, and as a matter of fact they should recognize it as an anomaly and move on. Analysts are expecting CMS to earn $0.30/share for the June quarter on revenue of $1.45 billion which is 6.67% higher than what they generated during the same period last year. I strongly believe CMS can bounce back from their March quarter by beating street estimates by $0.02/share - $0.03/share on revenue of $1.5 billion or higher.
Xcel Energy (XEL) - First Quarter results weren't exactly the greatest on many fronts. Net income fell to $184 million dollars or $0.38/share compared to $203.6 million or $0.42/share during the same period in the year prior. Revenue tumbled nearly 8.5% to $2.58 billion which missed analysts' estimates by nearly $140 million dollars.
Xcel Energy is probably one of the better performing companies in the group. Even though quarterly results weren't the greatest, the company still yields 3.8% ($1.04/share) and trades at a P/E ratio of 15.73. Long term investors have a few things to be happy about, especially when it comes to the company's dividend and upcoming earnings in the June quarter. Analysts are expecting XEL to earn $0.35/share on $2.48 billion in revenue, and given the fact that weather won't be so detrimental as it was in the previous quarter, expectations should be surpassed by between 3% and 6% a share on EPS and about $60 - $100 million in revenue.
Given the fact XEL trades at a P/E of 15.73, I'd begin to accumulate shares and then revisit my position near the time they are due to report earnings. One other strategy would be to directly play the dividends as their record dates and ex-dividend dates approached.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
