Premium dividend yield
Utilities came to the rescue amid market turmoil in the last two months, and with their higher dividend yields and slow stock price movements, they outperformed broader markets this year. In this series, we’ll look PPL (PPL), the highest-yielding utility stock. Whereas PPL’s current dividend yield is ~5.8%, its five-year average is ~4.6%, and broader utilities’ (XLU) average yield is ~3.4%. On January 2, PPL is expected to pay a quarterly dividend of $0.41, which is 4% higher than its dividend in the same quarter last year.
Poor dividend growth
Over the last five years, PPL’s dividend growth has been lower than peers’—while its dividend has risen 2.1% compounded annually, the Utilities Select Sector SPDR ETF’s (XLU) has risen ~4%, and Southern Company’s (SO) and Duke Energy’s (DUK) have risen 3%. PPL, Southern, and Duke are among the country’s top regulated utilities. Their generally stable revenue ultimately facilitates earnings and dividend stability.
Southern’s dividend yield is 5.3%, and Duke Energy’s is 4.2%, much higher than peers’ average. Including dividends, utilities have returned 3% this year, while the S&P 500 has returned -6%.