Antonio Alfonso, Kapitall: Utility stocks attract investors seeking solid dividend yields. Are any of these companies worth a closer look?
The utilities sector has struggled this year as interest rates rose through the summer. Companies have weathered the volatility in different ways, but the overall sell-off could possibly create a buying opportunity. Especially when you take into account the Federal Reserve's decision to continue its easy money programs.
Duke Energy (DUK) is one industry staple. Its dividend yield of about 4.6% can bring stable returns for risk-averse investors. With debt ratios better than the sector average, the company can do well even in an environment of rising interest rates. And the company recently announced new wind energy projects in Texas, which may be online starting in 2015.
Click on the image below to see data over time.Also poised to do shine in the current environment could be DTE Energy (DTE), with debt ratio of 1.05. The company's dividend yield at the moment is about 3.94%, which is considered healthy. However, since DTE recently moved below its 200 day moving average, investors should at least be wary in the short term. DTE's reports earnings on October 21, a time which some analysts and investors use to re-examine a stock. Click on the image below to see data over time. National Grid (NGG) is yet another utility stock with a strong reputation. The UK-based company has shown an upward trend in earnings per share, as well as its dividend over the past few years. But investors have been wary of its fairly high debt ratios. While National Grid's profit margins are solid, some investors may wonder how well it can perform in the short run. Click on the image below to see data over time. Overall, the utilities sector has been hurt this year thanks in part to expected interest rate increases. Since the Fed delayed tapering, the industry could perform well, at least until rates rise. While debt levels in some companies could be worrisome, which is to be expected, the sector can provide a nice dividend for investors seeking income over time.