If you're a defensive investor who likes collecting dividend income, consider these utility stocks.
A well diversified portfolio often includes some holdings considered to be less risky – such as defensive stocks. The utilities sector is traditionally known as defensive, in that its returns are not necessarily correlated to the markets at large. Consumers always need the services of utilities, in good times and bad, so the sector can often avoid the volatility of the general market.
Looking for more investing ideas in the utilities sector? Read about undervalued water stocks on Kapitall Wire.
And for investors seeking a little extra income along with their diversity, utility stocks approaching ex-dividend dates may present attractive options. The ex-dividend date is the day by which you must own a stock in order to receive the next dividend.
If you're interested in gaining some quick dividend income from defensive utility stocks, we ran a screen on utilities publicly traded in the US. Only three companies from this universe are approaching their ex-dividend dates within the next five trading days, so we examined them in more detail.
The first stock among our results, Portland General Electric (POR), turned up an accounts receivable flag in our screen. This can be a concern because companies rely on healthy balance sheets in order to make payouts.
Accounts receivable is the portion of revenue (sales) that has not yet been received. Since there is no guarantee that this money will be recovered, the higher the portion of revenue attributable to accounts receivable, the lower the quality of revenue. This is especially troubling for dividend stocks, because dividends are paid out of these revenues.
In this case, POR is seeing slower growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a larger portion of current assets over the same time period.
The remaining stocks on our list however, Piedmont Natural Gas (PNY) and Xcel Energy Inc. (XEL) both demonstrate positive trends in inventory – growth in quarterly revenue greater than growth in quarterly inventory. Since inventory represents the portion of goods not yet sold, faster growth in revenue than inventory is considered an encouraging sign. It may indicate that a company is selling its inventory more readily than in the past – although investors should also consider this might just be a reflection of a change in sales strategies.
Click on the interactive chart below to see data over time.
Do you think these stocks are worth investing in before their ex-dividend date? Use the list below as a starting point for your own analysis.
Ex-dividend date on 9/23/13.
Revenue grew by -2.42% during the most recent quarter ($403M vs. $413M y/y). Accounts receivable grew by 3.01% during the same time period ($137M vs. $133M y/y).
Receivables, as a percentage of current assets, increased from 18.27% to 21.85% during the most recent quarter (comparing 3 months ending 2013-06-30 to 3 months ending 2012-06-30).
2. Piedmont Natural Gas Co. Inc. (PNY, Earnings, Analysts, Financials): Distributes natural gas to residential, commercial, industrial, and power generation customers in portions of North Carolina, South Carolina, and Tennessee. Market cap at $2.47B, most recent closing price at $32.56.
Ex-dividend date on 9/20/13.
Revenue grew by 1.13% during the most recent quarter ($162.94M vs. $161.12M y/y). Inventory grew by -4.89% during the same time period ($69.8M vs. $73.39M y/y).
Inventory, as a percentage of current assets, decreased from 25.38% to 25.23% during the most recent quarter (comparing 3 months ending 2013-07-31 to 3 months ending 2012-07-31).
3. Xcel Energy Inc. (XEL, Earnings, Analysts, Financials): Engages in the generation, purchase, transmission, distribution, and sale of electricity to residential, commercial, and industrial customers, as well as to public authorities in the United States. Market cap at $13.64B, most recent closing price at $27.40.
Ex-dividend date on 9/17/13.
Revenue grew by 13.38% during the most recent quarter ($2,578.91M vs. $2,274.67M y/y). Inventory grew by 4.6% during the same time period ($494.89M vs. $473.14M y/y).
Inventory, as a percentage of current assets, decreased from 18.48% to 17.56% during the most recent quarter (comparing 3 months ending 2013-06-30 to 3 months ending 2012-06-30).
(List compiled by Emily Smykal. Quarterly sales data sourced from Zacks Investment Research, accounting data sourced from Google Finance, all other data sourced from Finviz.)
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Portland General Electric Company (POR, Chart, Download SEC Filings)
- Piedmont Natural Gas Co. Inc. (PNY, Chart, Download SEC Filings)
- Xcel Energy Inc. (XEL, Chart, Download SEC Filings)
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