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Top Dividend Stocks in Utilities

There are several opportunities to find both value and yields in the sector.

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Travis Miller: Income investors finally have a chance to get back into the stock market with utilities. The sector has been decimated, especially on a relative basis, since November of last year. Interest rates have gone up to 3%. Dividend yields are holding in in the sector around 3.5%, and we think there are several opportunities right now to find both value and yields with a couple of stocks yielding over 4.5% right now in the large-cap space.

One of those is Dominion Energy that we like. This, we think, has the best growth potential, around 7%, plus a 4.5% dividend right now, and it's our only wide-moat utility. An excellent management team there and great investment growth prospects. 

The biggest value play, we think, right now in the utilities sector is PPL. Again, a large-cap name, trading with a yield at 5.5%. There's some concern in the market about their operations in the United Kingdom. We still think the growth can be over 6% over the next few years. Then also, another large-cap widely held name, Duke Energy. Also, trading above 4.5%. Not as much of a value pick, but the income is very good, and we think it can grow 6%.

Travis Miller does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.