Analyzing the Dividend Profiles of the Four Biggest Utilities



Top utilities’ juicy yields

Utility stocks generally offer premium dividend yields compared to the broader markets. Currently, utilities (XLU) have an average dividend yield of ~3.1%. Dominion Energy (D), the third-largest utility by market cap in the country, offers a dividend yield of 4.8%, the highest among the top utility stocks. This yield implies a premium of more than 200 basis points to the benchmark ten-year Treasury yield and a premium of ~300 basis points to the broader markets.


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NextEra Energy has the lowest yield

Currently, Duke Energy (DUK) has a dividend yield of 4.1%, while Southern Company (SO) has a dividend yield of 4.7%. Duke Energy and Southern Company are two of the largest regulated utilities in the country. Regulated operations enable stable and predictable earnings, which eventually bodes well for stable dividends. The dividend yields of Southern Company and Duke Energy have been consistently higher than the average of the broader utilities in the last five years.

Renewables giant NextEra Energy (NEE) stock has a dividend yield of 2.6%, the lowest among the top utilities. NextEra Energy’s yield has traded at a noteworthy discount to its peers in the past five years.

Utilities offer higher yields than the broader markets and Treasury yields. Due to their slow but stable earnings growth, utilities have facilitated stable dividend growth for the last several years.


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