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Seven Utilities Stocks Worth a Look Now

July 22, 2011 4:58 pm
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Looking for a little juice for the portfolio or dividends as a hedge against inflation? Then you might want to consider these seven dividend-paying utilities stocks that are up more than 15% year to date and trading near 52-week highs.

CenterPoint Energy (NYSE: CNP): Based in Houston and sporting a market cap of $8.6 billion, this diversified utility saw net cash flow from operations jump more than 30% in the most recent reporting period. The company has a 3.9% dividend yield and a long-term EPS growth forecast of 5.7%. The share price is up more than 28% year to date. The stock has outperformed competitor Xcel Energy (NYSE: XEL), as well as the industry average, in that time.

Constellation Energy (NYSE: CEG): The company has announced an agreement to provide electricity to U.S. Postal Service locations in New York and the northeast. It also recently announced acquisitions of Houston-based StarTex Power and Connecticut-based MXenergy Holdings. Its dividend yield is 2.5% and the market cap is $7.8 billion. Shares are more than 27% higher year to date. The stock has outperformed the electric utilities industry average, as well as competitor Duke Energy (NYSE: DUK), during that time.

El Paso Electric (NYSE: EE): Goldman Sachs recently reiterated its Buy rating and price target due to the Texas-based company’s dividend and share buybacks. The utility is expected to post year-over-year EPS growth of 19.7% on August 3. The market cap is $1.4 billion and the long-term EPS growth forecast is 6.0%. The share price is up about 20% since the beginning of the year. The stock has outperformed American Electric Power (NYSE: AEP) and the industry average during that time.

NiSource (NYSE: NI): The Indiana-based utility is scheduled to post second-quarter results August 2; analysts expect to see revenues up 8.0% year over year. The dividend yield is 4.4%. The P/E ratio is 17.4 and the long-term EPS growth forecast is 7.6%. The share price has grown nearly 20% since the beginning of the year. In that time, the stock has outperformed competitors Dominion Resources (NYSE: D) and Duke Energy (NYSE: DUK), as well as the industry average.

ONEOK (NYSE: OKE): The Tulsa, Oklahoma-based natural gas provider just boosted its quarterly dividend by about 8%; it has raised its dividend 12 times since January 2006. ONEOK also recently completed a two-for-one stock split. Its market cap is $8.1 billion, the dividend yield is 2.6% and the long-term EPS growth forecast is 7.9%. The share price is up more than 36% year to date; the stock has outperformed its industry average and competitors such as OGE Energy (NYSE: OGE) in that time.

Portland General Electric (NYSE: POR): The Oregon utility raised the quarterly dividend 2% in May following better-than-expected first-quarter results and an increase in full-year guidance. The $1.9 billion market cap company has a dividend yield of about 4%. The P/E ratio of 11.5 is less than the industry average. The share price is more than 18% higher than at the beginning of the year. In that time, the stock has outperformed its industry average and the broader markets.

Southern Union (NYSE: SUG): This Houston-based natural gas provider has been the subject of a bidding war over the past few weeks but will be acquired by Energy Transfer Equity (NYSE: ETE). The merger is expected to be completed in 2012. Southern Union has a dividend yield of 1.4%. The share price is about 84% higher year to date, most of that growth coming after takeover talks began. The stock was outperforming its industry average even before that takeover bump.

Action Items:

Bullish: Traders interested in utilities exchange traded funds might want to consider the following trades:

  • PowerShares Dynamic Utilities Portfolio (NYSE: PUI): up more than 16% in the past year
  • Rydex S&P Equal Weight Utilities ETF (NYSE: RYU): up nearly 17% in the past year
  • First Trust Utilities AlphaDEX Fund (NYSE: FXU): up more than 18% in the past year
  • iShares Dow Jones U.S. Utilities Sector Index Fund (NYSE: IDU): up nearly 13% in the past year

Bearish: Traders looking for contrarian options may want to consider these alternate positions:

  • Proshares UltraShort Utilities (NYSE: SDP)
  • Direxion Daily Energy Bear 3X Shares (NYSE: ERY)

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

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