Baker's Dozen: Monthly Dividends

03/20/2015 9:00 am EST


David Dittman

Chief Investment Strategist, Australian Edge, Canadian Edge, & Utility Forecaster

Establishing a foundation of essential-service stocks is a tried-and-tested way to build wealth for the long-term, explains David Dittman, editor of Utility Forecaster.

We've developed the Baker's Dozen, a model of 13 stocks constructed primarily to generate multiple dividend checks each of the 12 months of the year.

January, April, July, October
Brookfield Renewable (BEP)—yield 4.9%
Piedmont Natural Gas (PNY)—yield 3.2%
Sempra Energy (SE)—yield 2.3%
Xcel Energy (XEL)—yield 3.2%

February, May, August, November
Apple (AAPL)—yield 1.7%
Energy Transfer Partners LP (ETP)—yield 6.1%
Kinder Morgan (KMI)—yield 4.2%
Verizon Communications (VZ) — yield 4.6%

March, June, September, December
American Water Works (AWK)—yield 2.2%
Chevron (CVX)—yield 4%
NextEra (NEE)—yield 2.6%
Northeast Utilities (NU)—yield 2.8%
Wisconsin Energy (WEC)—yield 3%

Xcel Energy, Wisconsin Energy, Piedmont Natural Gas, and Northeast Utilities get all their revenue from regulated utility or power-generation activities.

Xcel and Wisconsin Energy both benefit from above-average economic growth and good regulatory relations in their Midwest service territories.

Piedmont Natural Gas is enjoying strong growth in its Carolinas natural gas distribution market. And Northeast Utilities is a key player in alleviating pressure on New England’s power supply infrastructure.

Sempra Energy and NextEra Energy are supported by strong gas and electric utility operations in stable regulatory climates.

The Cameron LNG project, under construction in Louisiana, will help drive unregulated growth for Sempra. And NextEra is one of the most active US power companies when it comes to renewables, with substantial wind and solar investments.

Energy Transfer Partners LP and Kinder Morgan Energy are major players in the US energy midstream business.

They have held up remarkably well during the crude oil crisis, due in large part to the fact that revenues are based on fee-for-service or take-or-pay contracts.

Brookfield Renewable Energy Partners LP operates hydroelectric and wind facilities supported by long-term power purchase agreements.

American Water Works is the largest and most geographically diversified investor-owned water and wastewater utility in the US.

Our final three holdings are a bit further out on the risk spectrum. But they’re all high-quality businesses with strong market positions.

Verizon Communications has seen aggressive competition eat into recent results and the market has punished the stock. But it’s attractively valued at just 14.12 times earnings and it’s yielding 4.6%.

More importantly, Verizon’s spectrum assets are the best in the industry and it has unsurpassed ability to invest in the types of network improvements.

Chevron is down 20.8% since July 2014; however, its great scale, strong balance sheet, and significant free cash flow generation make it a sound bet for risk-tolerant investors with a long time horizon.

Apple has been a member of the Growth Portfolio Aggressive Holdings since August 2013. The stock offers a solid, growing dividend, creating value for shareholders.

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