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NEE, DUK, D, and SO: Comparing Top Utilities’ Dividend Yields

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Dividend yields

Investors generally seek shelter in safe-haven utility stocks amid market uncertainty due to their higher dividend-paying capabilities.

Among the top utilities, Dominion Energy (D) currently offers the highest dividend yield of 4.8%, representing a yield premium of more than 200–230 basis points to the broader markets and Treasury yields.

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Utilities beat the broader markets in terms of total returns driven by steady market movements and stable dividend payments. Over the past 12 months, utilities, including dividends, have returned 20%, while the broader markets have returned 10%.

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Stable dividends

NextEra Energy (NEE), the biggest component of the Utilities Select Sector SPDR ETF (XLU), has the lowest yield at 2.6%. Its high capex could be one of the reasons behind its lower yield.

Top regulated utilities Duke Energy (DUK) and Southern Company (SO) have yields of 4.1% and 4.6%, respectively. Duke Energy has paid dividends for 370 consecutive quarters, while Southern Company has paid cash dividends for 285 consecutive quarters. You can compare the dividend profiles of these two companies in Comparing Southern Company and Duke Energy’s Dividends.

On average, utility stocks offer a yield of 3%, which is higher than the broader markets and the benchmark ten-year Treasury yield. Apart from their yields, utilities offer fair dividend growth as well. Utility dividends are expected to increase 4%–6% per year for the next few years. Many utility stocks offer premium yields that are higher than the average.

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