Utilities certainly aren’t the sexiest investment category. Most investors dream of massive returns on incredible growth from that small cap tech company that takes off and never stops. For utilities stocks, the ceiling is typically much lower than on cyclical stocks, but the floor also tends to be more stable. Utilities tend to have steady demand for a product that everyone needs, giving it a relatively low level or risk. The steady returns of a utility with a strong dividend can help bolster any portfolio, giving it a foundation that can either provide steady if small returns or allow for riskier investments elsewhere.
So, here are five small cap utilities stocks that have dividend yields exceeding 3 percent, providing a stable if moderate source of income from an investment. What’s more, each has a forward P/E under 15, meaning that they should be priced attractively based on the companies current and projected earnings. As always, even relatively low risk investments like Utilities can go awry as there are no guarantees in the stock market, but Utilities companies can often be a low risk chance for steady if modest returns.
ALLETE Inc (ALE)
Market Cap: $1.56 billion Dividend Yield: 4.38 percent Forward P/E: 14.90
Allete is an energy company working with a regulated operations arm and an investment arm through which it provides power utilities in the upper midwest.
NorthWestern Corporation (NWE)
Market Cap: $1.26 billion Dividend Yield: 4.20 percent Forward P/E: 13.66
Doing business as NorthWestern Energy, NorthWestern provides electricity and natural gas to over 650,000 customers in Montana, South Dakota, and Nebraska.
Atlas Energy (ATLS)
Market Cap: $1.40 billion Dividend Yield: 3.56 percent Forward P/E: 8.95
Atlas Energy provides natural gas gathering, treating, and processing services in the Appalachia and Mid-Continent regions through its subsidiaries.
California Water Service Group (CWT)
Market Cap: $775.29 million Dividend Yield: 3.37 percent Forward P/E: 14.83
California Water Service Group is, in fact, a group that provides water service in California. More specifically, though, it’s a holding company with six operating subsidiaries, four of which are regulated public utilities, and all of which provide consumer and industrial water services.
Chesapeake Utilities Corporation (CPK)
Market Cap: $401.45 million Dividend Yield: 3.30 percent Forward P/E: 14.24
Chesapeake Utilities is engaged in various energy concerns and other businesses, including electric and natural gas utilities.
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