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3 Undervalued Dividend Payers

These utilities boast sizable yields and are undervalued.

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All conventional metrics for valuing utilities using earnings, book value, and dividend yield have come down from the record peaks reached earlier this year. We think the following utilities offer investors an opportunity for capital appreciation and yield well above the peer group.

Edison International EIX will always contend with California political risk. However, California's progressive energy policies also create more growth opportunities than most other U.S. utilities have. Edison's electric-only business, recent regulatory success, and $5 billion annual investment plan give us confidence that the company can increase earnings 6% annually beyond 2020. Edison has stakeholder support to harden the grid against natural disasters, integrate renewable energy, and support electric vehicle adoption. Now with the stock trading at a sizable discount to its peers and offering a nearly 5% yield, Edison offers a triple play of value, growth, and income.

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