Greg Harmon of Dragonfly Capital points out three attractive dividend stocks from the now-overlooked utilities sector that should continue to benefit from a rising market.
Does it surprise you that as the broad indexes are making new highs, utilities are starting to look attractive again? It shouldn’t.
After massive runs higher through 2011, all have corrected back toward their 50- and 100-day simple moving averages (SMAs) through a combination of price pullbacks and time. This has also left many of them sporting dividend yields over 4% again.
Whether these foretell of a market pullback or just a rising tide lifting all boats, they provide a good core to your portfolio. Here are three that are ready to head higher.
Let’s first look at American Electric Power Co (AEP):
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American Electric Power Co. (AEP) was nearly 10% above its 100-day SMA at its peak on January 1. It has now pulled back between the 50- and 100-day SMAs and is building a base.
On Tuesday (Feb. 7), it printed a strong bullish candle and it has support for more upside from a Relative Strength Index (RSI) that has turned back higher and an improving Moving Average Convergence Divergence (MACD) indicator. The dividend yield on this stock is currently 4.7%.
See related: Demystifying the MACD Indicator
Now let’s look at Consolidated Edison (ED):
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Consolidated Edison (ED) was also 10% above its 100-day SMA at one point, but has since corrected to between the 50- and 100-day SMAs. Its MACD has been improving since mid-January and is about to cross bullishly positive while the RSI is testing the midline after never falling bearish.
A closer look shows that the Bollinger bands are starting to expand to allow continuation of the move high started Tuesday. The dividend yield on this stock is 4.1% for now.
See related: Spot Trends Easily Using Bollinger Bands
Finally, let’s turn our attention to Hawaiian Electric Industries (HE):
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Hawaiian Electric Industries (HE) did most of its correcting through time and is already starting to move higher after a nearly 6% pullback. The RSI on this name is bullish and rising, and the MACD is positive and slowly growing.
The Bollinger bands have opened here and the stock is moving higher with a strong bullish candle on Tuesday. Despite the early move, it still has a dividend yield of 4.8%.
By Greg Harmon of Dragonfly Capital
