DRIP Expert Powers Up Utility Duo

10/20/2015 7:00 am EST


Vita Nelson

Founding Publisher and Editor, Moneypaper

While the stock market continues to be unsettled and investors uncertain, many companies—such as utilities—continue to roll along as before, explains Vita Nelson, dividend reinvestment plan expert and editor of MoneyPaper.

These firms are growing their revenues and earnings at a steady pace and often boosting their dividends regularly. Power companies are a perfect example.

To a large extent, they aren't subject to market panic, since the population in general is not going to stop using electricity, gas, or water.

And, while the rates they may charge are subject to approval by state utility commissions, those governmental bodies allow for a reasonable level of profitability.

Other necessities of life, such as food, gasoline, and phone service, also provide investors with some degree of reliable returns and a respite from uncertainty and volatility.

NextEra Energy (NEE)

NextEera is the parent of Florida Power & Light, a utility that engages in the generation, transmission, and distribution of electricity to 4.7 million customers in a 27,650 square mile area of eastern and southern Florida.

Its NextEra Energy Resources subsidiary is a non-regulated power generator that produces electricity from nuclear, natural gas, solar, and wind generation.
It is the US leader in production of energy from wind, with a capacity to produce 8,500 megawatts from those sources and 44,900 megawatts of electricity in total.

The company is expected to earn about $5.66 per share this year and $6.15 in 2016, compared with $5.30 in 2014. The dividend has been increased for 21 consecutive years and the annual payout of $3.08 per share results in a yield of 3.2%.

Piedmont Natural Gas (PNY)

Founded in 1949, Piedmont Natural serves more than one million retail customers in the Carolinas and Tennessee. It also transports, stores, and markets natural gas, propane, and related appliances.

Revenues for the fiscal year that ends in October are expected to top $1.4 billion and consensus estimates call for PNY to earn about $1.87 per share in fiscal 2015 and $1.99 in fiscal 2016, compared with $1.84 last year.

The annual dividend, which has been increased for 37 straight years, now stands at $1.32 per share, providing a 3.6% yield, and the DRIP offers a 5% discount on reinvestment.

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