Tuesday, May 30, 2023

High-Yielding Utilities With A Growing Dividends

Long considered the domain of “widows and orphans”, utilities have developed a somewhat stodgy reputation. Why are utilities considered good for widows and orphans?

Here a few reasons: 
1. They are generally less volatile than the market as a whole (low beta). 
2. Their products are something that people continue to need and use no matter what the economy is doing, thus, 
3. Their dividends tend to be more stable and secure.

Utilities would be the perfect dividend income investment, except for one thing – they tend to have a very low dividend growth rate. As such, you wouldn’t want a whole portfolio of utilities and you need to be very selective in which utilities are included in your portfolio, and when they are purchased.

The dividend growth rate is a key metric in many calculations. As such, I use a conservative estimate as follows: The minimum dividend growth rate of the 1, 3, 5, 7, 10 year compound annual growth rate or 15%, if dividends grew on average in excess of 15% for each consecutive 4 year period, within the last 10 years of history.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 150+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

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