As of today, Dividend.com is adding a 100-year old utilities company to the Best Dividend Stocks list. Utilities and industrials have been the flutter of everyone’s heart this year: they defied the downturn in the first few months of 2016 when the market witnessed a bloodbath, and are still strong as investors are willing to give a premium for a solid dividend payout.
The company we are adding today is a small-cap power generation company that owns more than fifteen hydro resource facilities, along with coal, natural gas and diesel facilities that generate more than 2,500 MW of power. They have 500,000+ customers and more than 4,500 miles of high-voltage transmission lines. Their target payout ratio is between 50% on a lower end and 60% on an upper end, as stated by their management. Based on 2016 earnings per share estimates of $3.89, their current payout ratio comes to 56.56%. Management has said that they plan to raise the dividend 5% or more every year until they reach the upper end of the stated payout ratio band.
To summarize, here are four reasons why we are adding this stock to the Best Dividend Stocks List:
- A 100-year history of power generation.
- Regulated business with a wide economic moat.
- Unique generation profile and mix of regulated and non-regulated assets have helped deliver on earnings and cash flows in recent years.
- Utilities viewed positively by the market when there is blood on the streets.
A Soft Removal From the Best Dividend Stocks List
We have removed a telecom giant that has been featured on our list since 2013. The stock has so far returned an incredible 54%, excluding dividends. Though this stock is being removed, it remains recommended with a rating of 3.5.