8/22/2011

8 Low Debt Utilities With High Dividend Yield

Best Yielding Utility stocks with Low Debt ratios by Dividend Yield - Stock, Capital, Investment. Utilities are wonderful investments. They have a huge consumer loyalty, generate stable cash flows and pay high dividends. A big disadvantage of utilities is beside the limited growth perspective, the high debt structure of the sector. Yes, utilities are capital intensive. If you look at large capitalized utilities, you find out that most of them (58.3 percent) have a long-term debt to equity ratio of more than one. This is a high value if you compare it with figures from the large cap consumer goods sector (21.3 percent) or the service sector (15.8 percent).

I screened the utility sector by stocks with low debt ratios and positive dividend yield figures. I decided to choose the long-term debt to equity ratio with a value of less than one as lead criterion. Second, the dividend yield must be positive. As result, 8 utilities remained and all have a dividend yield of more than 4 percent.

Here are my 3 most promising stocks from the screening results:

1. Cia Energetica de Minas Gerais (CIG) is acting within the electric utility industry. The company has a market capitalization of USD 11.9 billion, generates revenues in an amount of USD 3.9 billion and a net loss of USD 449.9 million. It follows P/E ratio is not calculable and forward price to earnings ratio amounts to 7.9, Price/Sales 3.1 and Price/Book ratio 2.5. Dividend Yield: 6.4 percent. Years of Consecutive Dividend Increasing: 0 Year. 5-Year Dividend Growth: 0 percent. The company paid dividends since 2008. The long-term debt to equity ratio amounts to 0.27.

2. Public Service Enterprise Group (PEG) is acting within the diversified utilities industry. The company has a market capitalization of USD 16.0 billion, generates revenues in an amount of USD 11.7 billion and a net income of USD 1.6 billion. It follows P/E ratio is 9.9 and forward price to earnings ratio 12.4, Price/Sales 1.4 and Price/Book ratio 1.6. Dividend Yield: 4.3 percent. Years of Consecutive Dividend Increasing: 7 Years. 5-Year Dividend Growth: 4.0 percent. The company paid dividends since 1907. The long-term debt to equity ratio amounts to 0.70.

3. Consolidated Edison (ED) is acting within the major diversified utilities industry. The company has a market capitalization of USD 15.4 billion, generates revenues in an amount of USD 13.2 billion and a net income of USD 1.1 billion. It follows Price/Earnings ratio is 14.9 and forward price to earnings ratio 14.7, Price/Sales 1.2 and Price/Book ratio 1.3. Dividend Yield: 4.4 percent. Years of Consecutive Dividend Increasing: 36 Years. 5-Year Dividend Growth: 0.9 percent. The company paid dividends since 1885. The long-term debt to equity ratio amounts to 0.93.

Take a closer look at the full table. The average price to earnings ratio (P/E ratio) amounts to 12.32 while the average forward P/E ratio is 11.90. The dividend yield has an average value of 4.8 percent. Price to book ratio is 1.7 and price to sales ratio 1.7. The average operating margin amounts to 19.2 percent and the long-term debt to equity ratio is 0.76.

8 Low Debt Utilities (Click to enlarge)
Related stock ticker symbols:
CIG, PEG, EOC, DUK, ENI, EXC, ED, PCG

Selected Articles:
· 12 Undervalued Dividend Stocks With Low Debt

1 comment:

  1. Steve M.11/09/2012

    Utilities are offering a decent risk-adjusted return during the current economic turmoil. Current low treasury yields have shifted the attention of income seeking investors to healthy dividend offering utilities. As long as treasury yields remain low, we believe utilities will remain attractive for income seeking investors. There are some concerns regarding the high valuations of utilities, but we believe that valuations are not as high, considering the current economic environment. Utilities are low beta stocks offering high yields. We believe that these stocks have a self-corrective mechanism through which their price adjusts to their dividends (as the stock prices rise dividend yields fall).

    Utilities are low risk businesses, with slow growth and a stable revenue base.

    ReplyDelete

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