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Analyzing the Largest S&P 500 Utilities’ Dividend Profiles

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Largest S&P 500 utilities

The utilities sector continues to be the top-yielding sector among broader markets. Currently, it’s trading at a dividend yield of 4.3%—compared to boader markets’ yield of 1.8%. Utilities’ yield is at a premium of ~180 basis points–200 basis points to the ten-year Treasury yield.

The four biggest utilities by market capitalization in the S&P 500 Utilities Index (XLU)—NextEra Energy (NEE), Duke Energy (DUK), Dominion Energy (D), and Southern Company (SO)—all offer attractive dividend profiles. We’ll discuss these dividend profiles in detail.

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Dividend yield

Broader utilities have fallen more than 10% in the past month—the most in more than a year or so. The recent fall pushed their average dividend yield beyond historical highs.

Southern Company, the second-largest regulated utility, offers the highest dividend yield of 5.0% among the top SPX utilities. Southern Company’s dividend yield hasn’t fallen below its peers in the last five years.

NextEra Energy, the largest utility by market capitalization and the biggest component in XLU, is trading at a dividend yield of 2.6%, while Duke Energy yields 4.3%. Dominion Energy is trading at a dividend yield of 4.0%.

Only NextEra Energy is trading at a yield that’s so much lower than the industry average. What makes NextEra Energy’s dividend profile striking is its dividend growth. Next, we’ll discuss these utilities’ dividend growth.

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