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S&P 500 Utilities with Above-Average Dividend Yields

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Nov. 20 2020, Updated 5:17 p.m. ET

Yield leaders

On March 21, 2018, the Fed, under the chairmanship of Jerome Powell, delivered its first 2018 rate hike of a quarter of a point. The Fed continues to look aggressive and expects at least two more rate hikes this year.

Utilities, which are generally perceived as rate-sensitive, continue to be the yield leaders in the broader markets. The Utilities Select Sector SPDR ETF (XLU), which tracks the S&P 500 Utilities Index, is currently trading at a dividend yield of 4.3%, while the broader markets are currently yielding 1.8%. US utility stocks are trading at a significant yield premium as they relate to Treasury yields.

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Dividend yields

There are many stocks from the S&P 500 Utilities Index that are trading at a yield far higher than the industry average.

SCANA (SCG), the smallest component of the S&P 500 Utilities Index, tops our list of the highest dividend-yielding utilities. It currently offers a yield of 6.3%, which is more than a 200-basis-point premium as it relates to the industry average.

Top utilities such as Duke Energy (DUK) and Southern Company (SO) are also among the top-yielding stocks in the sector. They have yields of 4.7% and 5.3%, respectively.

Utilities on average are targeting a per-share earnings growth of 4%–6% annually, which could influence their dividend growth at similar levels for the future. Considering fair earnings and dividend growth going forward, utilities (IDU) could continue to be among the top-yielding sectors.

For more information, be sure to read These Utilities Have Raised Dividends for More than 40 Years.

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