Next up: Utilities

So, I'd like to add some Utilities to the mix. I have stumbled across alot of ticker symbols as I read financial blogs, etc lately. However, a few have caught my attention, either due to high yields or due to consistent dividend growth for several years.

In the consistent growth category:
CEG yield 7% w/ moderate growth of dividend for 6 years
EMR yield of 4% but consecutive increases for 50+ years!
PGN yield 6% with slow increases for 20 yrs
OTTR yield 5 with slow increases for 6 yrs
HNP yield 6 with reasonable increases for 5 yrs

All of the above stocks have analyst ratings in the low to mid 2's, somewhere between buy and hold.

and in the high yield category:
VE yield 12 with increases for 4 years, big ones in the last two
CPL yield 13 - increases in last two years but not much data to go on
CIG ?10-14 payments are erratic to say the least, but overall yield each year has increased
BIP yield 8.7 only 1 year of history i could find

These are rated from 2.5 (VE) up to 1 strong buy (CIG)

I'm going to look at each group separately and choose the two I like most, unless the high yields turn out to all be junk. First lets look at the steady dividend growth utilities. I will talk about the high yielders in another post, as this one has become enormous.

CEG PE 14 PB ~1 # of under preform/sell ratings 1 under preform of 9 ratings
EMR PE 10.7 PB ~14 # low ratings: 0 of 16
PGN PE 13.5 PB ~2 # low ratings: 0 of 18 (but mostly holds)
OTTR PE 18.9 PB ~1.4 # low ratings: 1 of 2 ... not a great sign
HNP PE ? PB ~2.7 # low ratings: 1 of 2 ... again not so great

Note that CEG is sort of a merger arbitrage as it may be bought at a higher price then it is currently trading at. (Hence the low PB makes sense) However, the company, EDF, that may buy it doesn't pay a dividend.

Based on this, I would say I am favoring CEG and EMR, for the merger arbitrage side and the stability of 50 yrs of dividend growth. Time to check the charts however.

Over the last three months, PGN beat the pants off the S&P, and EMR tracked a bit above the S&P. HNP dropped, but has recovered a lot of ground. OTTR and CEG dropped like rocks, but CEG did so before the general market mayhem for its own reasons. Looking at the two year, PGN and EMR stayed the closest to the S&P, while the others underperformed, except OTTR which was doing good, until the recent crash beat the stuffing out of it.

The five year chart shows CEG doing great until its fall from glory, HNP see-sawing, and only EMR seems to outperform consistently on the long term.

Based upon what I have seen so far, I think that only EMR and PGN merit further balance sheet study as long term dividend investments. CEG may be a good merger arbitrage play, but I am not sure it's dividend is safe- I will look at its books too just for kicks.

CEG: consistent revenue growth, not so constant income growth, recent drop in total current assets, and in cash. I don't really know much of what this implies, but nothing jumps out at me. I still haven't found exactly what made this stock tank in September, so I guess I just won't touch what I don't understand, as Buffet advises. Except, Buffet wants to buy this company.... that makes me feel a bit conflicted... heh.

EMR: All I see is an increase in revenue and a recent decrease in assets and cash on hand, as with CEG. Debt went down? I really don't know what kind of data to expect, so I am just looking for things that jump out and scare me.

PGN: Same story, drop in assets in the last year or two, general growth. Why is this a trend- besides perhaps the obvious crisis of lending? Anyone want to fill me in?

Anyhow, I didn't see anything too scary so I am going to put up some buy orders and start cost averaging into 10k positions in EMR and PGN. I will talk about the high yielding utilities later, as this post is huge.