Largest S&P 500 utilities
US utility stocks have fallen more than 13% in the last three months after the interest rate hike in December 2017. The utilities sector continues to be one of the top-yielding sectors among broader markets. Currently, the Utilities Select Sector SPDR ETF (XLU) is trading at a dividend yield of 3.5%—way higher than the broader markets.
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)—offer attractive dividend profiles. We’ll discuss these dividend profiles in detail.
Southern Company, the second-largest regulated utility in the country, offers the highest dividend yield of 5.3%—significantly higher than its peers’ average. Southern Company’s dividend yield hasn’t fallen below its peers in the last five years. Duke Energy yields 4.7%, while Dominion Energy is trading at a dividend yield of 4.6%. Recently, the yields peaked mainly due to a steep fall in their stock prices.
NextEra Energy, the largest utility by market capitalization and the biggest component in XLU, is trading at a dividend yield of 2.9%. 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.