Utilities are often seen as wonderful tools for income investors. Thanks to steady demand and fixed costs, they create clockwork-like cash flows. As such, they can afford to reward their shareholders with decades’ worth of dividends and income. The best part is that many utilities—such as our latest Best Dividend Capture Pick—have found ways to grow their payouts further, offering more income over time.
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
Like many regional utilities, the secret to our pick’s success remains its operating area. The firm is one of the oldest and largest public utilities in Oklahoma. With a virtual monopoly in the state, our pick has made the most out of the region. The state continues to be a hotbed of activity thanks to its vast energy resources as well as its pro-business/low-tax environment. This has provided plenty of demand from manufacturers and has created an overall healthy state economy that is increasingly electricity-hungry.
Our pick’s strong operating region has helped it grow in other ways as well.
Oklahoma’s rich oil & natural gas resources have helped drive lower costs for our pick. With so much energy abundance around it, our pick has been able to feast on low-cost natural gas for its generation. Moreover, Oklahoma is rich in other energy resources as well, including wind. This provides a long tailwind for growth versus other utilities that have already undergone the coal-to-renewables or cogeneration switch. Moreover, a healthy regulatory environment has helped the firm win on rate hikes and other moves to increase prices.
The result is our pick offers the steady returns of a utility with plenty of growth tailwinds. As such, our pick has become a wonderful dividend capture play. A dividend capture strategy involves buying a stock before its ex-dividend date and then selling it after it has recovered the payout. With an ex-dividend date of Monday, April 7, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 5.4 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our latest regional utility stock could be a lucrative option.
