When it comes to picking equities, we have always put stock in dividend growth — even in sectors better known for yield, such as utilities, explains Richard Moroney, editor of Dow Theory Forecasts.

But buying stocks with good records of dividend growth has not been a winning strategy in the utility sector, so investors shouldn’t rely on that metric alone for stock selection.

Instead, look to dividend growth as an added bonus when you invest in stocks that look strong based on statistics that do work in the utility sector — such as value. As a group, utility stocks are more likely to raise their payouts than dividend stocks in other sectors, but tend to grow those dividends less aggressively.

About 93% of dividend-paying utilities in the S&P 1500 raised their dividend over the last three years, while 80% boosted it over the last 10 years — both by far the highest of any sector. However, those utilities averaged annualized dividend growth of just 5% over the last three and 10 years, below the index average of 9%.

The stocks in our Top 15 Utilities portfolio average dividend growth — and yields — higher than that of the average utility. We have two new additions to our utility portfolio: OGE Energy (OGE) and Southwest Gas Holdings (SWX) .

OGE Energy plans to boost its dividend at an annual rate of 10% this year and next year, which would bring the string of double-digit hikes to six consecutive years.

That aggressive dividend growth has driven the yield to 4.0%, well above the sector average of 3.3%. Despite that superior yield, OGE’s indicated year-ahead payout accounts for 66% of expected 2018 earnings, roughly in line with the average dividend-paying utility.

OGE serves 842,000 electric customers in Oklahoma and western Arkansas. The company also owns about one-fourth of Enable Midstream Partners (ENBL) , a master limited partnership (MLP) that gathers, processes, transports and stores natural gas.

The consensus projects OGE will boost per-share profits 4% this year and 5% next year. OGE has exceeded analyst targets in three of the last four quarters.

Southwest Gas has grown per-share profits at an annual rate of 6% over the last three years — double the average for Top 15 Utilities stocks and well above the average of 0% for the industry. In the March quarter, the company posted growth of 15% in revenue and 12% in profits, both exceeding analyst estimates.

The company serves 2 million natural-gas customers in Arizona, Nevada, and California. A mix of population growth and rate increases suggests the consensus projection of  4% annual profit growth over the next five years may prove conservative.

In addition to the gas utility, Southwest operates a construction business that focuses on installing and upgrading pipelines. In recent years, utilities have stepped up their investment in replacing pipeline infrastructure.

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