The market still looks shaky, but one sector, utilities, appears to be in recovery mode. For instance, the last time that I looked, Fidelity MSCI Utilities ($FUTY), an index set up to track US utilities, had returned eight percent over the previous month, compared to a two percent return for the S&P 500.
An advantage of utilities in this market is that most are rock-solid financially, and many pay relatively high dividends. So, if utility share prices should drop, you’d still collect the dividends while you wait for the market to recover.
From the Finviz home page, select “Screener” from the top menu to display the available screening parameters which Finviz calls “filters.” Use the dropdown menu associated with each selection filter to select your desired search value.
Start by using the filters in the top row to select the Utilities Sector and USA (Country), which limits your list to US-based utilities.
Next, specify your minimum acceptable dividend yield, which is analogous to the interest rate that you receive on a savings account. Your yield is the dividends that you expect to receive over the next 12-months divided by the price that you paid for the shares. For instance, your yield would be 10% if paid $10 per share and expect to receive one dollar of dividends over the next year.
Use the Dividend Yield menu to specify a minimum four percent yield.
You’ll always do best by limiting your list to profitable companies. You can use profitability measure Return on Equity (ROE) to do that, because ROE can only be positive if the firm was profitable over the past 12-months. Specify Positive (greater than zero) values for ROE.
Since institutional investors, such as mutual funds, have access to better information than we do, it pays to stick with stocks that the big players like. Institutional Ownership measures the percentage of shares owned by institutional investors. Specifying “Over 40 percent” for Institutional Ownership should do the trick.
"Buy" Rated Utilties
Market analysts publish buy/sell ratings on stocks that they follow. Finviz organizes those ratings into five categories: strong buy, buy, hold, sell, and strong sell. Since analysts are easy graders, it pays to stick with “buy” or “strong buy” rated stocks. Use the Analyst Recommendation menu and limit your list to “buy or better” rated stocks.
My screen turned up four utilities:
CenterPoint Energy ($CNP) serves natural gas and electricity customers in Texas and five other nearby states. Dividend yield 5.4 percent.
Duke Energy ($DUK) serves more than seven million electricity customers in the Midwest and Southeast regions. Yield 4.6 percent.
Exelon ($EXC), one of the largest US utilities, serves electricity and natural gas customers in Maryland, Pennsylvania, Illinois, and neighboring states. Yield 4.1 percent.
PPL Corporation ($PPL) serves almost one million customers in Kentucky and Virginia. It also serves electricity customers in parts of England. Yield 4.5 percent.
As always, consider these utilities to be research candidates, not a buy list. The more you know about your stocks, the better your results.
For tips and information on the best utilities and dividend stocks from Harry Domash, please check out Dividend Detective.
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