Market Overview

3 Small-Cap Utility Companies Worth Taking a Look at

The investors are scratching their heads, as the equity markets are red for the third day in a row and down as much as six percent in the past four weeks. Quality investments are extremely difficult to find, as majority of the U.S. companies are negatively impacted by the turmoil in Europe. Therefore, focusing on the companies that provide decent dividends and have a minimal exposure to Europe can provide an opportunity to make some money.

Regional utility companies are an example of stocks that could fall under this category. In addition, these companies might get a boost from higher energy consumption during the holidays.

Benzinga listed three small-cap utility companies that might be worth taking a look at:

1. MGE Energy (NASDAQ: MGEE)
Market Cap $986.5M
Dividend yield 3.60%

The Company operates in five segments: Electric utility operations, Gas utility operations, Nonregulated energy operations, Transmission Investments, and All Other. The current stock yield of 3.60% is attractive, but the company's trailing P/E ratio of 15.55 is slightly higher than the industry average.

2. CH Energy Group (NYSE: CHG)
Market Cap $782.7M
Dividend yield 4.15%

CH Energy Group, Inc. is the holding company of Central Hudson Gas & Electric Corporation and Central Hudson Enterprises. Central Hudson is a regulated electric and natural gas subsidiary. 4.15% dividend yield guarantees sufficient return during the volatile markets, but the trailing P/E of 23 makes it more expensive than the industry average. Also the company's earnings growth in the past years is slightly negative.

3. Otter Tail Corp (NASDAQ: OTTR)
Market Cap $713.7MM
Dividend yield 5.90%

Otter Tail Corporation is a holding company. It operates in seven segments. Electric includes the production, transmission, distribution and sale of electric energy in Minnesota, North Dakota and South Dakota by Otter Tail Power Company.

The company's 5.90% dividend rate is very attractive. However, it is questionable whether this dividend yield is sustainable.

Posted-In: Long Ideas Dividends Small Cap Analysis Trading Ideas

 

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