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3 Utilities For Long-Term Income

Aug. 25, 2023 3:43 AM ETBKH, ES, UGI22 Comments
Dividend Power profile picture
Dividend Power


  • Utilities sector has negative return and is worst-performing in 2023 due to rising interest rates.
  • Steep share price declines have led to utilities trading at lowest valuation with highest dividend yields in years.
  • Three undervalued utility stocks with dividend growth potential: Black Hills Corporation, Eversource Energy, UGI Corporation.

substation power worker


So far, 2023 has been unkind to utilities. The sector has a negative return and is the worst-performing one year-to-date. This point is unsurprising because rising interest rates have probably caused investors to prefer short-term U.S. Treasury bills and bonds over utilities. For instance, the

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Dividend Power profile picture
I am a self-taught individual investor and I have been investing in stocks for over 20 years. I focus on dividend growth investing with a long-term horizon since I believe in the compounding power of dividend growth investing. I generally look for undervalued large cap stocks with sustainable dividend growth and capital appreciation potential. My second focus is tech and small- or mid-cap stocks with or without dividends for their growth potential. I try to provide a little more in depth analysis weighing the positives and negatives. You can see my performance at my Tip Ranks profile. I am now in the Top 2.5% out of 26,000+ financial bloggers (September 2023).You can follow me at my blog Dividend Power. Read my e-book --> 10 Forever Dividend Growth StocksI also write stock analyses for Sure Dividend as a part-time free lance equity analyst. I provide investment analyses and research for their Sure Analysis Research Database. Additionally, I write stock snapshots and other research for Portfolio Insight.

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Comments (22)

I have been a long-term holder of BKH even before anyone on SA contributed, covered, or discussed the utility. My top ute dividend payers are: AEP, BKH, D, DUK, ED, and PNW.
Dividend Power profile picture
@sd55 - Decent choices at the right valuation.
@Dividend Power Which companies do you consider to be better?
Dividend Power profile picture
@sd55 - Of the three I wrote about I like ES and BKH the best. Of the ones you list, I own ED. I bought the stock when it was yielding 5%.
navyair profile picture
Good food for thought. My largest holding is a utility, acquired over 37 yrs via DRIP. WEC is a bit pricey now, but still a good, solid dividend payer. I'm now close to 5000 shares, most acquired in the $25-35 range. Don't plan on selling it, as it will serve as our self-insurance for long term care.
Dividend Power profile picture
@navyair - Sounds like you did well.
Good food for thought, thanks for sharing. I also noticed institutional investors have a high percentage ownership in ES and BKH. Always a decent nod.
Dividend Power profile picture
@PeanutGallery - You're welcome.
Bill in Shanghai profile picture
UGI has a lot of debt and is exposed to higher rates. A large part of its business is the distribution of propane which is declining. The dividend is attractive but the stock is cheap for a reason.
Dividend Power profile picture
@Bill in Shanghai - Total debt is only ~$7.1B. But I think the stock is cheap because of the non-regulated businesses not being priced well. The company is harder to understand than a pure play regulated utility.
Universal Huckleberry profile picture
@Bill in Shanghai A quick check of your claim that propane is on the decline reveals this:

Propane Market Analysis

The Propane Market size is expected to grow from 189.05 million tons in 2023 to 233.68 million tons by 2028, at a CAGR of 4.33% during the forecast period (2023-2028).

China to Dominate the Asia-Pacific Market

China is the world's largest propane consumer, with an estimated share of about 20%. China imports large amounts of propane from other countries to satisfy the huge domestic demand. The primary factor attributed to the rise in propane imports in the nation is the increased demand for propane dehydrogenation or PDH plants.In 2022, China produced 291.61 million mt of LPG, naphtha, gasoline, jet/kerosene, gasoil, and fuel oil over January-July, up 3.9% year on year, despite crude throughput falling 6.3% over the same period, as per NBS data. China imported 2.12 million mt of LPG, propane, and butane, in May 2022, up 7.1% month on month.

The U.S. Market is Estimated at $34.2 Billion, While China is Forecast to Grow at 4.2% CAGR

The Propane market in the U.S. is estimated at US$34.2 Billion in the year 2020. China, the world`s second largest economy, is forecast to reach a projected market size of US$29 Billion by the year 2027 trailing a CAGR of 4.2% over the analysis period 2020 to 2027. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 0.5% and 1.6% respectively over the 2020-2027 period. Within Europe, Germany is forecast to grow at approximately 1% CAGR.
Dividend Power profile picture
@Universal Huckleberry - Thanks for the information.
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Related Stocks

SymbolLast Price% Chg
Black Hills Corporation
Eversource Energy
UGI Corporation

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