5 Best Utility Stocks to Buy for Dividends

TL;DR

With the ongoing uncertainty in the market due to COVID-19, investing in utility stocks can provide safety and a strong dividend yield. Five utility stocks with high dividend yields and potential price upside are recommended.

Transcript

hey bowtie nation joseph hogue here with the let's talk money channel and an extremely timely video for you today nation with covid cases topping 200 000 a day last week and distribution of a vaccine still at least a month away the market could be in for a very difficult few months it's times like this that i'm looking for some certainty and safety... Read More

Key Insights

• 😘 Despite lower commercial demand for power, utility stocks offer stability and strong dividend yields.
• 🚙 The average analyst price targets for the recommended utility stocks are expected to be upgraded based on favorable 2021 earnings estimates.
• 🚚 Duke Energy, First Energy, Consolidated Edison, PPL Corporation, and Southern Company are expected to deliver positive price returns and have solid investment potential.
• ❓ Consolidated Edison's consistent dividend increases over 46 years and its renewable energy focus make it an attractive investment option.
• 💯 PPL Corporation's plan to sell its UK segment and focus on its core business could unlock significant value for investors.
• 💪 Southern Company's shift toward renewable energy and the potential addition of a new nuclear plant in Georgia contribute to its projected strong earnings growth.
• 💓 Following the recommended utility stocks in the 2021 Bow Tie Nation portfolio on Stock Card offers potential market-beating returns.

Questions & Answers

Q: Why are utility stocks considered safe investments?

Utility stocks are regulated and provide essential services, making their profits relatively stable. Additionally, their high dividend yields make them attractive for income-seeking investors even during market downturns.

Q: What is the average price to earnings ratio for utility stocks?

The average price to earnings ratio for utility stocks is slightly above 18 times, which is around 14 percent above the long-term average but still lower than many other sectors.

Q: What are the key factors that make Duke Energy a recommended utility stock?

Duke Energy has announced a major clean energy investment and has achieved significant cost reductions through restructuring. It has a target of net zero methane emissions by 2030 and is expected to exceed earnings estimates for this year. Furthermore, it offers a 4.2 percent dividend yield.

Q: What legal concerns have affected First Energy's stock price?

First Energy terminated its CEO and had its bonds downgraded due to governance concerns related to a bribery case. However, these legal issues are not expected to significantly impact the company's bottom line, creating a potential opportunity for investors.

Summary & Key Takeaways

• Utility stocks offer safety and high dividend yields, making them attractive investments during uncertain times.

• The average price to earnings ratio on utility stocks is above the long-term average but still below other sectors, offering potential value.

• Duke Energy, First Energy, Consolidated Edison, PPL Corporation, and Southern Company are highlighted as top utility stocks for 2021, with each stock offering high dividend yields and potential price upside.